Explain this mini case what are the stock market index of it, if any? Mini Case -- History of the Dow Jones Industrial Average The Dow Jones Industrial Average (DJIA) is an index composed of 30 “blue chip” industrial firms. On May 26, 1896, Charles H. Dow added up the prices of 12 of the best-known stocks and created an average by dividing by the number of stocks. In 1916 eight more stocks were added, and in 1928 the 30-stock average made its debut. Today the editors of the Wall Street Journal select the firms that make up the DJIA. They take a broad view of the type of firm that is considered “industrial”: In essence, it is almost any company that is not in the transportation or utility business (because there are also Dow Jones averages for those kinds of stocks). In choosing a new company for DJIA, they look among substantial industrial companies with a history of successful growth and wide interest among investors. The components of the DJIA are changed periodically. For example, recently ATT and Bank of America were replaced with Apple and Nike. Most market watchers agree that the DJIA is not the best indicator of the market’s overall day-to-day performance. Indeed, it varies substantially from broader based stock indexes in the short run. It continues to be followed so closely primarily because it is the oldest index and was the first to be quoted by other publications. It continues to be popular because it tracks the performance of the overall markets reasonably well over the long run.
Explain this mini case what are the stock market index of it, if any?
Mini Case -- History of the Dow Jones Industrial Average
The Dow Jones Industrial Average (DJIA) is an index composed of 30 “blue chip” industrial firms. On
May 26, 1896, Charles H. Dow added up the prices of 12 of the best-known stocks and created an average by dividing by the number of stocks. In 1916 eight more stocks were added, and in 1928 the 30-stock average made its debut.
Today the editors of the Wall Street Journal select the firms that make up the DJIA. They take a broad view of the type of firm that is considered “industrial”: In essence, it is almost any company that is not in the transportation or utility business (because there are also Dow Jones averages for those kinds of stocks). In choosing a new company for DJIA, they look among substantial industrial companies with a history of successful growth and wide interest among investors. The components of the DJIA are changed periodically. For example, recently ATT and Bank of America were replaced with Apple and Nike.
Most market watchers agree that the DJIA is not the best indicator of the market’s overall day-to-day performance. Indeed, it varies substantially from broader based stock indexes in the short run. It continues to be followed so closely primarily because it is the oldest index and was the first to be quoted by other publications. It continues to be popular because it tracks the performance of the overall markets reasonably well over the long run.
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