Mutual Funds

Index Funds

What is a “capitalization-weighted” index?

A capitalization-weighted index uses market capitalization (the current value of all stock outstanding) to give proportionate weight to these stocks in relation to the total market capitalization of the index. Stocks that are highly valuable, with a large market capitalization, can influence the performance of an entire capitalization-weighted index by pulling the overall market prices either up or down.


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