The Dow Jones And Company


Dow Jones & Company was founded in 1882 by Charles Dow, Edward
Jones and Charles Bergstresser. The Dow Jones Industrial Average is now
the world's most vital business and financial news and information service.
The DJIA is an index of 30 "blue-chip" US stocks. The Dow Jones Industrial
Average tracks the stock performances of about one percent of the
companies traded on the New York Stock Exchange floor. It is the oldest
continuing US market index at over 100 years. It is called an "average"
because it was originally computed by adding up stock prices and dividing
by the number of stocks. The methodology remains the same today, but the
divisor has been changed to preserve historical ...

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simple math
skills:by adding up the prices of its companies shares,dividing that by
thirty. But the stock market can sometimes be to hectic for basic math.
The most frequent reason for this is a stock split. Suppose a company in
the DJIA issues one new share for each share outstanding. After this two-
for-one "split," each share of stock is worth half what it was immediately
before, other things being equal. But without an adjustment in the divisor,
this split would produce a distortion in the industrial average. Here is
an example: Imagine three stocks selling at $5, $10 and $15. Their average
price is $10. Now assume the $15 stock is split three-for-one, and the
stock sells for $5. Nothing has happened to the value of a investmenting
in these shares, but the average of their prices now is $6.67, not $10.
An adjustment must be made to compensate so that the "average" will remain
at $10. This can be done in several ways mathematically, but at Dow Jones
it is handled by changing the ...

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PAPER DETAILS
Added: 1/5/2004 11:50:15 AM
Category: Economics
Type: Premium Paper
Words: 579
Pages: 3

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