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URL:  https://boards.fool.com/nasdaq-11604388.aspx

Subject:  NASDAQ Date:  12/3/1999  12:48 PM
Author:  xu17 Number:  444 of 2244

I have a question on how NASDAQ composite index is calculated.

By definition, the index includes all stocks traded in NASDAQ, weighed by each stock's market cap. When a new company goes public through NASDAQ, does that by itself contribute to the increase of the index? In other word, if the prices of all existing NASDAQ stocks remain unchanged, would the index still go up simply because a new stock is being added to the index?

I consider this to be important, because other major indices, Dow 30 and S&P 500, all contains fixed number of companies.

When I hear NASDAQ has gone up 50% over the year, while the other two indices have only relatively modest gain, I wonder whether the comparision is fair, with all the dot-com IPO's that have come out this year.
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