Search for a Term:

What is Divisor?

Definition of Divisor

Used in construction of stock indices. Suppose there 10 stocks in an index, each worth $10 and the index is at 100. Now suppose that one of the stocks must be replaced with another stock that is worth $20. If no adjustment is made to the divisor, the total value of the index would be110 after the swapping. yet there should be no increase in value because nothing has happened other than switching the two constituents. The solution is to change the divisor; in this case from 1.00 to 1.10. Note that the value of the index, 110/1.1, is now exactly 100 - which is where it was prior to the swap.
Do you have a question that has not yet been answered? Let us know.
Tel: 0207 0700 961 or Email: support@advfn.com

FTSE 100 Index

FTSE 100 Index intraday chart

Gulf Keystone

Gulf Keystone Chart
 GKP Chart  GKP Chat
 GKP Share Price  GKP Level 2
 GKP Info  Free ADVFN account

Top Investment Questions

Your Recent History
LSE
GKP
Gulf Keyst..
LSE
QPP
Quindell
FTSE
UKX
FTSE 100
LSE
IOF
Iofina
FX
GBPUSD
UK Sterlin..
Stocks you've viewed will appear in this box, letting you easily return to quotes you've seen previously.

Register now to create your own custom streaming stock watchlist.

By accessing the services available at ADVFN you are agreeing to be bound by ADVFN's Terms & Conditions

P:31 V:us D:20171124 20:34:49