Thursday, August 11, 2005

Capitalization-Weighted Index

Capitalization-Weighted Index

Also referred to as a market-weighted index, a capitalization-weighted index is one in which a stock affects the index as a whole only in relation to its size (i.e. market capitalization).

The Standard & Poor's 500 (S&P 500) is a capitalization-weighted index of 500 widely held stocks selected to be representative of the stock market as a whole.

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