IPFS News Link • Stock Market
Dow Jones Changes "Hoax" Index Divisor For First Time In 2 Years
• zerohedge.com by Tyler DurdenThe new divisor is now 0.145233969 from 0.146021281. With the new divisor, a $1 price move in any Dow component will translate to a swing in the level of the Dow between 6.8854 and 6.8483 points.
MarketWatch reminds us, is a price-weighted index, which means its level is decided by the absolute price changes in its component shares, not percentage-point swings like other indexes.
Here's a more in-depth explanation of how the divisor works, from MarketWatch.
"The so-called divisor, or in this case multiplier, is the figure used to determine the influence of any of the 30 components that make up the price-weighted Dow industrials.