A computation that components each worth and traded amount to reach at a weighted common worth. This calculation is especially helpful in finance to find out the common worth paid for a safety over a given interval, weighted by the quantity traded at every worth. For instance, if 100 shares had been bought at $10 and 200 shares at $12, the ensuing weighted common would mirror {that a} bigger portion of the funding was made on the increased worth.
The employment of this metric provides a extra correct reflection of the common price foundation than a easy arithmetic common. Its significance lies in offering a clearer understanding of buying and selling exercise and worth developments, enabling extra knowledgeable decision-making in funding methods and threat administration. Traditionally, its software has grown in parallel with the elevated sophistication of economic markets and the necessity for exact analytical instruments.
