Weighted Average Market Capitalization


DEFINITION of 'Weighted Average Market Capitalization'

A stock market index weighted by the market capitalization of each stock in the index. In such a weighting scheme, larger companies account for a greater portion of the index. Most indexes are constructed in this manner, with the best example being the S&P 500.

BREAKING DOWN 'Weighted Average Market Capitalization'

For example, if a company's market capitalization is $1 million and the market capitalization of all stocks in the index is $100 million, then the company would be worth 1% of the index. The alternative to weighting by market cap is a price-weighted index such as the Dow Jones Industrial Average.

  1. Outstanding Shares

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  2. Free-Float Methodology

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  3. Price-Weighted Index

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    A simple arithmetic or geometric average used to calculate stock ...
  5. Standard & Poor's 500 Index - S&P ...

    An index of 500 stocks chosen for market size, liquidity and ...
  6. Market Capitalization

    The total dollar market value of all of a company's outstanding ...
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