What formula is used when determining the movement of those thirty stocks
2007-01-10 10:42:41 · 2 answers · asked by sunsaah2002 2 in Business & Finance ➔ Investing
It is calculated by adding up the prices of the 30 stocks in the index and dividing by what is known as the Dow Divisor. Currently, that number is .12482483. That divisor is adjusted for splits and replacements of one stock for another in the index. If a split or replacement occurs, you take the revised closing prices divided by the closing index that day, and that is your new divisor. I believe the divisor started out at 10, it's been reduced to what it is now over the years.
2007-01-10 12:22:34 · answer #1 · answered by alan76543 2 · 0⤊ 0⤋
The Dow is a collection of stocks, if you can view it that way.
I think it is around 30 or more stocks, (blue chip) and some will go up and some will go down on a given trading day. That makes a numerically calculated average on a daily basis. The stocks are from different market sectors, representative of buy / sell trends. I would think the formula could be influenced, example, much trading in a particular sector, and also believe the DOW to be so well established as a benchmark, that the market makers might not see any reason to give up that information.
2007-01-10 19:57:45 · answer #2 · answered by The Advocate 4 · 0⤊ 0⤋