Advertisement
Anonymous
2
Discussion (2)
Learn how to style your text
Reply
Save
Kelly Trinh
02 Nov 2019
Backoffice technical at financial services firm
In a market-weighted index, if a company representing 10% of the index goes up by 50% (say), then the index would roughly go up by 5% if other shares flat. For a price-weighted index, it depends on the dollar price of the different shares and cannot say for sure what would happen to the index.
For this reason, market-weighted indices are a better representation of the overall performance of the market and much more common to find instruments to track.
Reply
Save
Write your thoughts
Related Articles
Related Posts
Related Posts
Advertisement
10 year comparison: