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 change is more important than the actual numeric value. Therefore, knowing that a stock exchange is at, for example, 5,000, does not 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 either "indexes" or "indices".
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 cannot 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.
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