stock index or stock market index is a method of measuring the value of a section of the stock market. It is computed from the prices of selected stocks (typically a weighted average). It is a tool used by investors and financial managers to describe the market, and to compare the return on specific investments.

An index is a mathematical construct, so it may not be invested in directly. But many mutual funds and exchange-traded fundsattempt to “track” an index , and those funds that do not may be judged against those that do.

 

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*This guide is also based on wikipedia’s texts & images. We thank the authors , for their great efforts