11 – L1 09 Price Weighting V2

So, let’s say an Index like the Nikkei 225, tracks the price movements of 225 stocks. To get a single Index number, we could add up the single share price of all of the 225 stocks, and there’s your index number. That’s more or less what the Nikkei 225 Index does, and this is called Price Weighting, or Equal Weighting. The Dow Jones Index is also a Price-Weighted Index. Note, that Index creators usually rescale the number, but we’ll see that later in the lesson.

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