Options Trading For Dummies, 4th Edition
Book image
Explore Book Buy On Amazon
To help understand financial index changes, you should know how indexes are built. Indexes are not created equal (well . . . one is). Financial indexes are constructed in three different ways:
  • Price-weighted: Favors higher-priced stocks

  • Market cap-weighted: Favors higher-cap stocks

  • Equal dollar-weighted: Each stock has same impact

About This Article

This article is from the book:

About the book author:

Joe Duarte, MD, is a financial writer, private investor and trader, and former money manager and president of River Willow Capital Management. He's been quoted in Barron's, Marketwatch.com, and The Wall Street Journal. Learn more at joeduarteinthemoneyoptions.com.

This article can be found in the category: