index

Index

A statistical measure of change in an economy or a securities market. In the case of financial markets, an index is essentially an imaginary portfolio of securities representing a particular market or a portion of it. Each index has its own calculation methodology and is usually expressed in terms of a change from a base value. Thus, the percentage changes is more important that the actually numeric value. For example, knowing that a stock exchange is at, say, 5,000 doesn't tell you much. However, knowing that the index has risen 30% over the last year to 5,000 gives a much better demonstration of performance.

The plural of index can be spelled either indexes or indices.

Notes:

The Standard & Poor's 500 is one of the world's best known indexes, and is the most commonly used benchmark for the stock market.

Technically, you can't actually invest in an index. Rather, you invest in a security such as an index fund or ETF that attempts to track an index as closely as possible.

See also: DAX, DJIA, DJTA, DJUA, E-mini, ETF, FTSE, Index Arbitrage, Index Fund, Index Futures, Index Hugger, Index Option, Passive Management, S&P 500, Wilshire 5000 Index

---

Index

Statistical composite that measures changes in the economy or in financial markets, often expressed in percentage changes from a base year or from the previous month. Indexes measure the ups and downs of stock, bond, and some commodities markets, in terms of market prices and weighting of companies in the index.

---

index

The relative value of a variable in comparison with itself on a different date. Many security price indicators such as the Standard & Poor's series and the New York Stock Exchange series are constructed as indexes. Also called stock index. See also base period.

---

index

To adjust a variable by a selected measure of relative value. For example, it has been proposed that an investor's basis on a security be indexed for changes in consumer prices so that only real increases in value will be taxed. Also called tax indexing. See also subindex.