Price-weighted index and the return on the index

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  Since, then it is alternating between positive and negative. 3. DJIA is a price weighted index, hence the return on ThreeStock price weighted index resembles more with that on the DJIA. 4.

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  The value weighted index shows better return as the value invested in stock A which produced lowest return is least. This post addresses how to construct a price -weighted index and value weighted index for stocks.

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  Hints: Rates of return are based on beginning-of-year prices, and the S&P Index is weighted by market values of the companies in the index.

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  -0.39% -0.59% Standard Deviation 5.29% 4.95% 6.36% 7.06% DJIA is a price weighted index and S&P500 is a value weighted index, hence I expected that the return on WTK price weighted index would resemble more with that on the DJIA.

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  Construct a price-weighted market index using the three stocks, X, Y, and Z. What is the index's value on date 1? Price Weighted Index on date 1 = (16+5+24)/3=15 b. What is the price-weighted index's value on date 2?