How can you say the average is unweighted if an average is price - ProProfs Discuss
Advertisement

How can you say the average is unweighted if an average is price weighed?

Asked by Bertie, Last updated: Sep 16, 2021

+ Answer
Request
Question menu
Vote up Vote down

1 Answer

John Smith

John Smith

John Smith
John Smith

Answered Sep 08, 2016

An unweighted average means that you, the individual who constructs the average, do not apply any particular weighting. You simply add up all the stocks and then divide by the number of stocks.

But if you play around with averages for a minute or two, you'll realize that there is a naturally occurring weight among prices, one that you cannot avoid. Astock with a very high price will have a greater influence over the average than a lower priced stock. So, while a simple average has no special weighting applied, the very nature of numbers will bring its own weighting to the calculation. However, this natural weighting does not mean that a weighting has been applied to the average.

upvote downvote
Reply 

Advertisement
Advertisement
Search for Google images Google Image Icon
Select a recommended image
Upload from your computer Loader
Image Preview
Search for Google images Google Image Icon
Select a recommended image
Upload from your computer Loader
Image Preview
Search for Google images Google Image Icon
Select a recommended image
Upload from your computer Loader

Email Sent
We have sent an email to your address "" with instructions to reset your password.