Calculating index DJIA
where p - is the price of company shares components of the index, and d - a divider Dow. Events such as, for example, a breakdown of shares or changes in the list of stocks comprising the index, result in a change in the amount of stock prices of companies comprising the index. In such cases, to avoid a gap index, Dow divisor is updated so that the price immediately before and after the event coincide:
Stock split
Split of shares (Stock split) - increase in the number of outstanding shares in the corporation. If the company has been in circulation of 1 million shares, and the split is carried out on 2 to 1, then the company will have 2 million shares and every holder of 100 shares, will own 200. The price of shares at the same time decreases approximately 2-fold. Market capitalization of the company and the percentages of shareholders in the company remains unchanged, but increases the liquidity of shares and, consequently, the volume of trades in shares of the company.
Information: Since the index number DJIA - is the average value of stock prices, the most it is influenced by the relative changes of expensive stocks. For example, if you share, worth $ 1 rise in price by 100, it will also affect the index, as if the action worth $ 100, rose in price by 1 even if both companies the same market capitalization. In this sense, the action, with the high cost of Bole, have more weight for the index. , Dow Jones publishes a daily list of the most significant for the index components (although the value of a component is changed each time how the stock price). The value is simply proportional to the cost shares, and is not used in calculating the index of DJIA.