Thursday, April 23, 2009

Understanding How the Dow Jones Is Calculated -- Seeking Alpha

In order to keep the DJIA consistent the "divisor" must also change. The current divisor is published on page C4 of the Wall Street Journal daily. The current divisor as of April 17, 2009 is .125552709. To get an idea of what this means we'll divide 1 point by the divisor and we get 7.9647. This means that a 1 point change in any of the 30 stocks will move the index up/down by 7.9647 points. For example, we'll say that 28 of the 30 Dow components finish the day unchanged but BAC and C both moved up 1 point, we could calculate the index average change by dividing 2 by the divisor...
Understanding How the Dow Jones Is Calculated -- Seeking Alpha
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