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What Is the Difference Between a Price-Weighted Index and a Capitalization-Weighted

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What is the difference between a price-weighted index and a capitalization-weighted (value-weighted) index?


Definitions:

Free Trade

An economic policy that allows imports and exports among countries with minimal or no tariffs, quotas, or other restrictions.

Chinese Product

Products manufactured in China, often highlighted in discussions about global trade, manufacturing practices, and economic policies.

American Manufacturers

Companies based in the United States that produce and sell goods within the country and/or internationally.

Fixed Rate System

A regime where a country’s currency is tied to another currency or a basket of currencies at a set exchange rate.

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