Meaning DIVISOR: Used in construction of stock indices. Suppose you have 10 stocks in an index, each worth $10 and the index is at 100. Now suppose you want to replace one of the stocks with another stock (reshuffling happens). Suppose that the new stock to be included is worth $20. So the total value of the index is 110 after the swapping. But we really shouldn't have an increase in value because nothing has happened - other than switching two constituents. So, what people do is to change the divisor. In this case, the divisor goes from 1 to 1.10. Notice that the value of the index, 110/1.1 is now exactly 100 - which is where we began from
More terms such as Divisor in Dictionary D.
- Definition Divergence:
- Examples When two or more averages or indexes fail to show confirming trends divisor definition.
- Definition Double Auction Market:
- Examples listed securities are bought and sold through brokers on the securities exchanges, as distinguished from the OTC market, where trades are negotiated. Unlike the conventional auction with one divisor explain.
- Definition Default Premium:
- Examples A differential in promised yield that compensates the investor for the risk inherent in purchasing a corporate bond that entails some risk of default divisor what is.
- Definition Dealer Loan:
- Examples Overnight, collateralized loan from a money market bank made to a dealer financing his position by borrowing divisor meaning.
- Definition Double-Declining-Balance Depreciation:
- Examples Method of accelerated depreciation divisor abbreviation.
