Dictionary of Finance and Investment Terms: price-weighted index
price-weighted index
index in which component stocks are weighted by their price. Higher-priced stocks therefore have a greater percentage impact on the index than lower-priced stocks. In recent years, the trend of using price-weighted indexes has given way to the use of market-value weighted indexes. The Dow Jones Industrial Average remains the most prominent example of a price-weighted index, although, strictly speaking, it is an average as distinguished from an index.
