This week we talk about indexes, specifically on the stock market. What is an Index? We know how stocks have performed - simply compare today’s price over yesterday’s price. If we need to find out how the stock market, as a whole, performed, we need a way to measure it. A simple metric would be to take a small set of representative stocks and value them every day, and their movement is like a barometer for the market.
These stocks form the index. Each stock has a weight in the index, based on its importance relative to . . .