weighted

adjective weight·ed \ ˈwā-təd \
Updated on: 20 Nov 2017

Definition of weighted

1 : made heavy : loaded
  • weighted silk
2 a : having a statistical weight attached
  • a weighted test score
b : compiled or calculated from weighted data
  • a weighted mean
3 : inclined 1

Examples of weighted in a Sentence

  1. The head of the golf club was weighted.

Recent Examples of weighted from the Web

These example sentences are selected automatically from various online news sources to reflect current usage of the word 'weighted.' Views expressed in the examples do not represent the opinion of Merriam-Webster or its editors. Send us feedback.

First Known Use of weighted

1597


Financial Definition of WEIGHTED

weighted

What It Is

Weighted refers to the mathematical practice of adjusting the components of an index to reflect the importance of certain characteristics.

How It Works

Here is information about five stocks.

If we wanted to create an unweighted index of the price performance of these five companies, we might average their stock prices and call it a day (i.e., we would calculate the average as $8.60).

However, this unweighted average doesn’t take into account the issuers’ actual sizes or the number of shares outstanding (in other words, without reflecting the issuers’ true heft in the economy). The tiny companies can sway the index as much as the more significant companies. Accordingly, if one of the higher-priced stocks (Company D, in our example) has a huge price increase, the index is more likely to increase even if the other, more meaningful companies in the index decline in value at the same time.

Thus, we could create a weighted index to give more weight to the bigger issuers. We could do this by multiplying the share price by the shares outstanding, summing the totals, and then dividing by the total shares outstanding:

Why It Matters

In the finance world, some indexes are weighted and some are not. It is important to understand how indexes are weighted so that you can understand what influences those indexes, what the index really conveys, and whether the index is relevant to your investment objectives.


WEIGHTED Defined for English Language Learners

weighted

adjective

Definition of weighted for English Language Learners

  • : held in place or made heavier by a weight

  • —used to say that something favors or does not favor a particular person, group, etc.



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