What will happen to the Dow once Cisco and Travelers are officially added? Will the price just be recalculated and we will see a big jump? If so is it possible to know what the recalculated price will be? OR will it be a graduall move over the next few days? Or has it already been priced in? Sorry if this is a really obvious question, but we all have to start somewhere.....
In case you care about specifics its actually called the Dow divisor. Not the coefficient as I said in the previous post. However the concept is still the same.. in case you want to know more indepth how the process works check out this link: http://www.investopedia.com/articles/02/082702.asp
The change will take place on June 8. A new Dow Divisor will be used to calculate the index at the open that day. The current divisor = 0.125552709.
Thanks for the link. All clear now. So its pretty much a seamless transistion, but is it common to see a run up after a recalculation led by the new stocks? or is it just not a big deal?