The Basics of the Dow Jones Industrial Average

The Basics of the Dow Jones Industrial Average

Part I: The History

o What year was the average first calculated? ________________________________ o What company first calculated the DJIA? ___________________________________ o Who owned the company at that time? ____________________________________

Part II: The Basics

o What is the DJIA? ______________________________________________________ o What does it measure? _________________________________________________ o What is it not? ________________________________________________________ o How many companies were originally included? _____________________________ o How many companies are included today? _________________________________ o What is the most recent stock to be added? ________________________________

Part III: Calculation

A. Historical Formula:

B. Current Formula:

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Part IV: What Happened to the Original Companies?

A. Go to "The Original 12" link at Mrs. Fahey's Web (. djia-the-basics.html). Pick one company.

B. Name of Company: ____________________________________________________

C. Industry in which it operated: ____________________________________________

D. What happened to it? __________________________________________________

Part V: Research Trends

A. Choose one of the 30 component companies that comprise the current DJIA from list of companies available "DJIA Component Companies" link at Mrs. Fahey's Web.

B. Identify stock ticker symbol from list: ______________________________________

C. Track the stock prices for 5 dates. The dates should be at least 30 days apart. Use "Historic Stock Prices" link at Mrs. Fahey's Web. Chart information on Page 3.

D. Track DJIA for same 5 dates as in C. Use "Historic DJIA" link at Mrs. Fahey's Web. Chart information on Page 3.

E. Compute percentage change for stock from date to date. Do the same for the DJIA. Chart information on Page 3.

To calculate the percentage increase:

First: work out the difference (increase) between the two numbers you are comparing. Increase = New Number - Original Number Then: divide the increase by the original number and multiply the answer by 100. % increase = Increase ? Original Number ? 100. If your answer is a negative number then this is a percentage decrease.

To calculate percentage decrease:

First: work out the difference (decrease) between the two numbers you are comparing. Decrease = Original Number - New Number Then: divide the decrease by the original number and multiply the answer by 100. % Decrease = Decrease ? Original Number ? 100 If your answer is a negative number then this is a percentage increase.

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F. Chart information below.

Date

Stock Price

Change Between Dates

DJIA

Change Between Dates

Part VI: Analysis

A. How did the changes compare? Did the Stock Prices increase when the DJIA increased? Decrease when the DJIA decreased?

B. Were the size of the changes the same?

C. Were there any significant historical events that occurred during your dates?

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