Carat is often confused with size even though it is a measure of weight. The cut of a diamond can often make it appear larger or smaller than its actual weight. Jewelers often refer to the carat weight of diamonds in terms of points. There are 100 points to a carat (similar to 100 pennies to a dollar). If a jeweler says a stone weighs 25 points, he or she means it weighs 25/100 of a carat, or ¼ carat.
Since larger diamonds are more rare than smaller diamonds, the value rises exponentially with carat weight.