prisvægtning

Prisvægtning, often translated as price weighting, is a method used in constructing stock market indices where the constituent stocks are weighted according to their share price. This means that a stock with a higher per-share price will have a greater influence on the index's movement than a stock with a lower per-share price, regardless of the company's overall market capitalization.

In a price-weighted index, if one share of a high-priced stock increases by $1, it will have a larger impact on the index's value than a $1 increase in a low-priced stock. This can lead to situations where a company with a relatively small market capitalization but a high share price can disproportionately affect the index.

The most famous example of a price-weighted index is the Dow Jones Industrial Average (DJIA). Its methodology means that stock splits and stock dividends can also affect the index's value, requiring adjustments to maintain continuity. This method is less common today than market-capitalization-weighted indices, such as the S&P 500, which are generally considered to be more representative of the overall market performance. The primary advantage of price weighting is its simplicity in calculation and understanding. However, its drawback lies in its potential to distort the index's reflection of the market's true breadth and value.