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Meaning / Definition of

Weighted Stock Index

Categories: Finance,

In weighted stock indexes, price changes in some stocks have a much greater impact than price changes in others in computing the direction of the overall index. By contrast, in an unweighted index, prices changes in all the stocks have an equal impact.A price weighted index, such as the dow jones industrial average (DJIA), is affected more by the changing prices of higher-priced securities than by changes in the prices of lower-priced securities. Similarly, a market capitalization weighted index, such as the nasdaq composite index, gives more weight to price changes in securities with the highest market values, calculated by multiplying the current price per share by the number of outstanding or floating shares. A capitalization weighted index may also be called a market value weighted index. The theory behind weighting is that price changes in the largest or most expensive securities have a greater impact on the overall economy than price changes in smaller-cap or less expensive stocks. However, some critics argue that strong market performance by the biggest or most expensive stocks can drive an index up, masking stagnant or even declining prices in large segments of the market, and providing a skewed view of the economy.

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Definition / Meaning of

Separate Account Fund

Categories: Finance,

Each variable annuity contract offers a number of separate account funds. Each of those funds owns a collection of individual investments chosen by a professional manager who is striving to achieve a particular objective, such as long-term growth or regular income.You allocate your variable annuity premiums among different separate account funds offered in your contract to create a diversified portfolio of funds, sometimes called investment portfolios or subaccounts.If you're comparing different contracts to decide which to purchase, among the factors to consider are the variety of funds each contract offers, the past performance of those funds, the experience of the professional manager, and the fees.In evaluating the past performance and other details of the funds a contract offers, or the funds you are using in the contract you selected, you can use the prospectus the annuity company provides for each separate account fund. You may be able to find independent research on the funds from firms such as morningstar, inc., Standard & Poor's, and Lipper.

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