A stock market or stock exchange index to find some of the statistical average. These stocks included in the common characteristics-based index, for example, you can share the same transaction, in the same industry, companies from a certain size, or on behalf of a particular geographic area to.
The best known index is the U.S. Dow Jones Industrial Average Index, the New York Stock Exchange composite index and Standard & Poor's 500 Composite Stock Price Index, there are many others. Index to provide a particular industry or stock exchange an overview of economic health.
The index calculation, in many ways. A "price-weighted index is based solely on stock prices. This type of index does not take into account the importance of action, whether it is index or size of the company. In contrast," market-weighted index "that the company size. Therefore, In the small company price changes less than the index in the role of large companies. Another index of the third type of "market share-weighted index" is based on the number of shares, rather than their total value.
In addition to providing a specific comprehensive assessment of the health of the economy, indicators can also be a useful tool for investors. For example, "passively managed investment funds, is the index-based funds, has proven to be superior to a consistent basis to manage the fund. If the mutual fund is an index, which is twice the rate of the farm is based. In other words, if the New York Stock Exchange is one percentage point, the New York Stock Exchange, the Fund also by 1 percentage point. This is for research and reduce operating costs, conversion – that can be transferred to the Fund's investments savings.
The most well-known U.S. index might be Dow Jones Industrial Average Index, tracking 30 in the United States, General Electric, Coca-Cola, IBM and General Motors stock activity leadership. As a weighted average index, but also re-assigned to the most expensive price. Some analysts believe that, but this is not the current stock market weighted price movements accurately, and the establishment of 30 enterprise groups too small to allow a proper evaluation.
The Standard & Poor's 500 Index is based on 500 U.S. companies carefully selected, representing a wide range of economic activities. Only the Dow Jones have more influence, S & P is considered to accurately predict the status of the U.S. economy.
The FTSE 100 index is outside the United States the most influential index. Based on the London Stock Exchange listed 100 large companies, this index is one of the largest in Europe, as a British economic indicators. In France CAC 40 Index and the Nikkei 225 index, other important other countries.
On a particular index changes, there are more choices than ever before. ETF Exchange Traded Fund or the introduction of many more traders and investors a complete index of changes in circumstances involved in the purchase in all securities listed in the index. ETF's have become very popular, so it is liquid. For example, QQQQ's, PowerShares QQQ Trust has a daily turnover of more than 100 million shares.

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