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what would happen to the divisor of Dow Jones Industrial Average if FedEx, with a current...

what would happen to the divisor of Dow Jones Industrial Average if FedEx, with a current price of around $210 per share, replaced Intel with a current value of about $40 per share?

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Answer #1

Current price of FedEx=210

Current price of Intel =40

Dow Jones Industrial average is calculated by adding up all the stock prices of its 30 components and dividing the sum by the divisor.

Divisor for 2020 is 0.152 i.e for every $1 change is value the DJIA will have a movement of 6.57 (1/0.152=6.57points)

When lower value share is replaced by higher value share , then the Dow Jones Industrial average will have upward movement.

= (210-40)/0.152

=1118.42points upward movement

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