How markets work
Adjusted close
A historical closing price restated to account for dividends and splits, so returns compare fairly over time.
How it works
Raw historical prices are misleading. A share that split two-for-one appears to halve overnight; one that paid a large dividend appears to drop. Neither is a loss to the holder.
The adjusted series removes those artefacts, so a chart of adjusted closes shows what an investor actually experienced. Every serious return calculation uses it.
Where it misleads people
Adjusted and unadjusted series answer different questions. A chart of adjusted prices will not match the price you paid five years ago, and treating it as a record of past quotes leads to nonsense conclusions about "old" price levels.
Related terms
- Closing priceThe official price a security finished the session at, usually set by the closing auction.
- Total returnThe full return from an investment: price change plus every dividend or interest payment received.
- Stock splitDividing existing shares into more, smaller shares, leaving the total value unchanged.
- DividendA cash payment a company makes to its shareholders out of its profits.
More in How markets work
All 33 How markets work terms · The full glossary, 433 terms
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