enders_knight
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The Dow Jones Index is a composite of 30 different stocks.
3M, Alcoa, Altria, AmEx, AIG, AT&T, Boeing, Caterpillar, Citigroup, Coca-Cola, Disney, Dupont, ExxonMobil, GE, GM, HP, Home Depot, Honeywell, Intel, IBM, J&J, JP Morgan, McDonald's, Merck, Microsoft, Pfizer, Proctor & Gamble, United Tech, Verizon and Wal-Mart.
The makers of the index take the value of those 30 stocks and use them to create the Dow Jones Industrial Average using and equation that takes into account their stock price and divdes it by a number that is adjusted as stocks split or spinoff of other things like that.
It's a fairly straight forward formula, Just all Stock Prices added together Divided by a single number.
Currently the number is actually less than 1, so the DJIA is higher than the sum of its parts. The number it is divided by reduces if a stock split occurs.
Basically these Indexes are just made to give you an idea on how the markets in general are doing.
Since someone else mentioned it..you Cannot actually buy an Index. It is only an indicator, you can however buy funds that attempt to mimic the index. |
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