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What is a stock index? What is it for? List at least two examples of known...

What is a stock index? What is it for? List at least two examples of known stock indices

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Answer #1

A stock index aims to measure the performance of a certain area of the market made by replicating that area with the help of uniting a basket of securities from that market.

It is used for :-

1. It is used to measure the sentiment of whole financial market

2. It is used for benchmarking returns. For example for ETF's and Mutual Funds

3. It is used for measuring the direction of movement of various financial products including commodities, equity, bonds etc

Examples of known stock indexes -

1. S&P 500

2. Dow Jones Industrial Average

I hope this makes sense.

Please hit the like button

Took real efforts

Thanks & Regards

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