Asked by Elizabeth Steinke on Jun 06, 2024
Verified
The Dow Jones Industrial Average (DJIA) is computed by
A) adding the prices of 30 large "blue-chip" stocks and dividing by 30.
B) calculating the total market value of the 30 firms in the index and dividing by 30.
C) adding the prices of the 30 stocks in the index and dividing by a divisor.
D) adding the prices of the 500 stocks in the index and dividing by a divisor.
E) adding the prices of the 30 stocks in the index and dividing by the value of these stocks as of some base date period.
Dow Jones Industrial Average (DJIA)
A stock market index that measures the stock performance of 30 large companies listed on stock exchanges in the United States, representing a significant indicator of the market's overall health.
Blue-Chip Stocks
Shares in large, reputable companies known for their ability to operate profitably in good and bad economic times, often paying dividends.
Divisor
A number by which another number, typically the numerator of a fraction, is divided.
- Learn the techniques and adjustments associated with primary stock indices.
Verified Answer
DE
Deirdre EspositoJun 10, 2024
Final Answer :
C
Explanation :
The Dow Jones Industrial Average (DJIA) is calculated by adding the prices of the 30 stocks in the index and then dividing by a divisor, which is adjusted for stock splits, dividends, and other factors to ensure the index's value remains consistent over time.
Learning Objectives
- Learn the techniques and adjustments associated with primary stock indices.