FTB-C000146 / Financial concept

Price-Weighted Index

A price-weighted index gives constituent influence according to eligible per-share prices under its divisor methodology.

Intermediate Formula defined 1 linked topicPublished

Definitions

In plain terms

A higher-priced constituent affects the index more than a lower-priced constituent, even if the lower-priced company is larger.

Technical

The index level is generally an eligible price sum divided by a maintained divisor, with split and constituent-change adjustments preserving methodology continuity.

Scope

Price weight reflects share-unit price, not company size or an equal economic investment.

Formula

I = sum(P_i) / D
LaTeX: I=\sum_i P_i/D
SymbolMeaningUnit
P_ieligible constituent pricecurrency per share
Dmaintained price-index divisorprice units per index point

Output unit: index points

Examples

  • A governed index record identifies price-weighted index with its applicable methodology version, effective time, source, and units.

Common misconceptions

  • Price-Weighted Index does not have one universal implementation without the named index methodology, data cutoff, and governance context.

Concept relationships

Prerequisites

Broader concepts

Contrasts with

Where this concept is used

Tutorials planned

These catalogued topics use this concept, but their complete build has not shipped yet.

  • D03-F02-A01 Primary

Evidence and governance

  1. S&P Dow Jones Indices Index Mathematics Methodology S&P Dow Jones Indices · first party methodology

    Supports: preferred label, short definition, technical definition, formula

    Limits: Authoritative for the provider's indices; conventions are not universal defaults for every index or security-level return series.

  2. Fintech Builder Glossary Definition Contract The Fintech Builder · internal governed contract

    Supports: variant distinction

    Limits: Defines governed platform behavior rather than claiming these policies are universally prescribed by external McClellan methodology.

Reviewed by
Last reviewed
2026-07-27
Next review
2027-07-27
Record status
published
Written by

Fintech engineer building market-data and financial systems, and the author of every article, glossary record, and reference implementation on The Fintech Builder.