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What Does Arithmetic Index Mean?

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What Does Arithmetic Index Mean?

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An index of securities that uses an arithmetic sum to determine changes in the index without taking the relative size of the securities into account. An arithmetic index of stocks does not incorporate weightings based on market capitalization, price, or any other metric, but merely calculates the raw changes in each component, then divides the sum by the number of index components. Also known as an “unweighted index”.

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