Question

The most broadly based index that uses a broad base of stocks in its portfolio and can give an investor a good indication of how the overall stock market has performed in a given day is called the:

		Dow Jones Industrial Average
		Standard & Poor's 500
		Russell 2000 Index
		Wilshire 5000

Note:for this question I got different answers on Chegg.Option B)Standard & Poor's 500 and option D) Wilshire 5000 which one is correct answer?

Answer 1

A broad based index is an index that constitute of major stocks in an indice. As they are the major player in the stock market their movement altogether describe the overall movement of the stock market. This doesn't mean that there are more number of stock. Broadly based defines the indices which has more highly capitalised stocks.

S&P 500 is considered as most broadly based Index, which constitute all the major companies in the portfolio.

So the answer is Standard and Poor 500