Bd Stock Indices

In: Business and Management

Submitted By reazuliqbal
Words 705
Pages 3
Index
Index is a statistical method of measuring change in an economy or security market as whole or in parts over time. Each index has its own calculation methodology and is usually expressed in terms of a change from a base value. Thus, the percentage change is more important than the actual numeric value.

Classification of Index
✔ Equity indices
• • • • • Broad market index Multi-market index Mult-market index with fundamental weighting Sector index Style index

✔ Fixed income indices ✔ Indices for alternative investment
• • • Commodity indexes Real estate indexes Hedge fund indexes

Index Weighting Methods
✔ Price Weighted Index: A stock index in which each stock influences the index in proportion to its price per share. The value of the index is generated by adding the prices of each of the stocks in the index and dividing them by the total number of stocks. Stocks with a higher price will be given more weight and, therefore, will have a greater influence over the performance of the index. ✔ Capitalization Weighted Index: A type of market index whose individual components are weighted according to their market capitalization, so that larger components carry a larger percentage weighting. The value of a capitalization-weighted index can be computed by adding up the collective market capitalization of its members and dividing it by the number of securities in the index. ✔ Float-adjusted Market Capitalization Weighted Index: Its like market capitalization weighted index. The weights are based on the proportionate value of each firm's shares that are available to investors to the total market value of the shares of index stocks that are available to investors. Firms with relatively large percentage of their shares held by controlling stockholders will have less weight than they have in an unadjusted marketcapitalization index. ✔ Equal Weighted Index: A type of…...

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