In a price weighted average stock market indicator series, the following type of stock has the greatest influence:
A) the stock with the highest price.
B) the stock with the lowest price.
C) the stock with the highest market capitalization.
D) the stock with the lowest market capitalization.
E) the stock with the highest P/E ratio.

Question

Quizplus · Accepted Answer

In a price-weighted average, each stock's influence on the index is directly proportional to its price. Therefore, the stock with the highest price will have the greatest influence on the indicator series.

In a Price Weighted Average Stock Market Indicator Series, the Following