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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.
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A statistical measure of the value of a certain portfolio of securities. The portfolio may be for a certain class of security, a certain industry, or may include the most important securities in a given market, among other options. The value of an index increases when the aggregate value of the underlying securities increases, and decreases when the aggregate value decreases. An index may track stocks, bonds, mutual funds, and any other security or investment vehicle, including other indices. An index's value may be weighted; for example, securities with higher prices or greater market capitalization may affect the index's value more than others. One of the most prominent examples of an index is the Dow Jones Industrial Average, which is weighted for price and tracks 30 stocks important in American markets.
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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.


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.
Wall Street Words: An A to Z Guide to Investment Terms for Today's Investor by David L. Scott. Copyright © 2003 by Houghton Mifflin Company. Published by Houghton Mifflin Company. All rights reserved. All rights reserved.


An index reports changes up or down, usually expressed as points and as a percentage, in a specific financial market, in a number of related markets, or in an economy as a whole.

Each index -- and there are a large number of them -- measures the market or economy it tracks from a specific starting point. That point might be as recent as the previous day or many years in the past.

For those reasons, indexes are often used as performance benchmarks against which to measure the return of investments that resemble those tracked by the index.

A market index may be calculated arithmetically or geometrically. That's one reason two indexes tracking similar markets may report different results. Further, some indexes are weighted and others are not.

Weighting means giving more significance to some elements in the index than to others. For example, a market capitalization weighted index is more influenced by price changes in the stock of its largest companies than by price changes in the stock of its smaller companies.

Dictionary of Financial Terms. Copyright © 2008 Lightbulb Press, Inc. All Rights Reserved.


(1) A statistical indicator that measures changes in the economy in general or in particular areas.An example is the cost-of-living index.(2) A reference point against which measurements are taken for purposes of making future adjustments.An adjustable-rate mortgage might begin with an interest rate of 6 percent and provide that it will increase or decrease in a like percentage as the increase or decrease between today's quoted price for 10-year U.S.Treasury bonds and the price on the loan's annual anniversary date.We would say that 10-year T-bonds are the index.

Some leading loan indices include

• Wall Street Journal prime
• Federal discount rate
• Fed funds rate
• 11th District Cost of Funds
• 10-year Treasuries
• One-year LIBOR

The Complete Real Estate Encyclopedia by Denise L. Evans, JD & O. William Evans, JD. Copyright © 2007 by The McGraw-Hill Companies, Inc.
References in periodicals archive ?
The index can include multiple asset classes, not just stocks
The index for Taiwan remained in negative territory for the sixth straight month, while the index for East China returned to positive territory in August, after dipping into negative territory for the first time in this survey's history in July.
First, the Demonomanie was ordered suspended while the Congregation of the Index made up its mind.
(Despite the fact that the index is named the Wilshire 4500, it actually uses weighted returns from approximately 6,500 companies.)
Inverse lists reverse the usual structure of data by storing the data from the database as keys to permit rapid searching of the data content with pointers back to the database as data in the index for quick retrieval of the data records.
In three outbreaks (events 1, 2, and 6, Table), the index patient was tested after a suspected foodborne outbreak had been reported to the local health department by symptomatic patients (events 1 and 6, Table) or an infectious disease specialist (event 2, Table).
It would not be enough simply to add the trade weights of the five countries because the index would not then be comparable before and after the launch of the euro.
By early 1999, the BLS will have largely accounted for this "lower-level" substitution when it implements a geometric-means formula to combine individual prices at the lowest level in the index.
The Index is now published annually by The Heritage Foundation and the Wall Street Journal.
This is evident given the index rebenchmarking risk that the CPI measurement could be adjusted to reduce the measured rate of inflation.
He reports that the Index Machine can mold a 4-mm-thick, 47.5-g preform in less than 15 sec, compared with 22.5 sec for the same preform on a conventional 96-cavity machine.
It was in 1966 that the Catholic Church ceased publication of the Index Librorum Prohibitorum (Index of Prohibited Books), the list of banned books that began with an Index of Forbidden Works promulgated by Gelasius in Rome in the year 496.

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