Weighting, or weighted
Māori translation:
Definition
In share market indexes, weighting determines the relative importance of each component included on the index. There are a few different methods for weighting:
- Price-weighted: Where stocks with a higher value have more influence on the index, such as used on the Dow Jones Industrial Average (DJIA)
- Market cap-weighted: Stocks with larger market capitalisations (total dollar market value) have more influence, such as on the S&P 500
- Equal-weighted: Each stock has the same influence, regardless of its price or market cap
- Fundamentally weighted: Stocks are weighted based on fundamental metrics, such as earnings or dividends
We acknowledge and thank the FMA, Dr Karena Kelly and Brook Taurua Grant, the RBNZ and the Māori Dictionary for their research which helped us with te Reo Māori kupu for this glossary.
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