Module 3 Paper

Module 3 Paper - Small Group Discussion What is a stock...

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Small Group Discussion What is a stock index? What are some characteristics of the Dow Jones Industrial Average?
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What is a stock index? What is a stock index? Measure of “how we are doing” Index can measure whatever you want/be comprised of whatever firms you want What is important is not the value itself, but the change in value over time Example: NASDAQ Composite, generally tells you health of tech industry Example: S&P 500 – considered broadest index (has majority of largest companies in US)
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Dow Jones Industrial Average What are some characteristics of the Dow Jones Industrial Average? Oldest and most cited index Only 30 stocks All influential companies with revenue > $7B Uses a stock price weighting, rather than market cap weighting (higher priced stocks have most influence, but doesn’t mean they are biggest companies) Does not include small or medium companies Not only industrial stocks (entrance of McDonald’s about 15 years ago changed that)
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Module 3 Paper - Small Group Discussion What is a stock...

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