CFA Practice Question

There are 275 practice questions for this study session.

CFA Practice Question

A price-weighted index gives the ______.

A. highest-price stock more impact on the movement of the index
B. lowest-price stock more impact on the movement of the index
C. highest percentage change more impact on the movement of the index
Correct Answer: A

Price-Weighted Average: Each stock in the average is weighted by its price. The higher the price, the greater the relative weighing. The Dow Jones Industrial Average represents a price-weighted average.

User Contributed Comments 3

User Comment
kalps DJIA is a price weighted index which looks negatively at stock splits
jasonkwk what do u mean by looks negatively?
mcbreatz A stock split will reduce the price of a stock by half so now that stock has less impact on the index.
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