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) / DI=\sum_i P_i/D| Symbol | Meaning | Unit |
|---|---|---|
P_i | eligible constituent price | currency per share |
D | maintained price-index divisor | price 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
Evidence and governance
- 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.
- 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
- fintech-builder-owner-approved
- Last reviewed
- 2026-07-27
- Next review
- 2027-07-27
- Record status
- published