What is a Price Weighted Index?
Price Weighted Index:
A stock index that weights each stock in the index in proportion to the price of
its shares. The share price of all the stocks in the index are added together.
The sum is divided by the number of stocks to calculate the index value.
Stocks that trade at a higher price per share have a greater influence over the
performance of the index.

For Example:
Suppose an index had 3 stocks. X stock traded last at $90 per share, Y stock
last traded at $9 per share and Z stock last traded at $1 per share. The value
of the index is 33.3 (90 + 9 + 1) / 3 = 33.3 . X comprises 90% of the value of
the index (90 / 100 = 90%). A 10 % increase in the price of X would increase
the value of the index by 3 (10% x 90) / 3 = 3). A 10 % change in the price of Z
would increase the value of the index by 0.033 (10% x 1) / 3 = 0.033).

The Dow Jones Industrial Average (DJIA), the Dow Jones Transportation Average
(DJTA), the
Dow Jones Utility Average (DJUA), and the Dow Jones Composite
Average (DJCA) are prominent indexes that are price weighted.
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