A stock market index in which stocks are held in proportion to their share prices is called a ___________ index.

Question

Quizplus · Accepted Answer

A price-weighted index is calculated by adding the stock prices of all the companies in the index and dividing by a divisor that takes into account stock splits, dividends, and other adjustments. Therefore, stocks with higher share prices have a greater impact on the index's value. The Dow Jones Industrial Average is an example of a price-weighted index.

A Stock Market Index in Which Stocks Are Held in Proportion