Dow Jones Industrial Average (DJIA) Flashcards
What is theDJIA?
The DJIA is a stock index comprised of 30 large-cap American companies, its performance is thought to reflect the broader market.
Why is the DJIA important?
It’s made up of 30 of the largest publicly traded companies in America, and it is one of the most well-known indicators. Stock indexes provide a quick picture of the total performance of the stock market on a daily basis. The DJIA is known as a benchmark index for US blue-chip stocks.
What are “blue-chip stocks”?
Blue-chip stocks are companies that have been around for a long time, are worth a lot of money, and are financially healthy. Examples: Nike, Coca-Cola.
How is the DJIA calculated?
You add up the prices of the 30 stocks and divide the sum by the DOW DIVISOR, a numeral that factors in stock splits and Stock dividends. The Dow Divisor changes frequently and is maintained by Dow Jones Indices. As of 10/22 the Dow Divisor was 0.1492.
How Are Stocks Selected for the Dow? Who selects them?
The Dow is selected by a committee of editors of the Wall Street Journal. One rule the company must be a large cap, must have excellent reputation and it must demonstrate sustained growth. The companies must be non-transportation and non-utility company in the S & P 500.
