Ask the Institute

DATE:  October 01, 2012


Can you please explain what a stock index is?

A stock index is a method of measuring a group of stocks with a goal to provide a one-number indication of how that group of stocks is performing. Indexes are often used in the same way that averages are used. When it comes to the stock market, there are many indexes. Some indexes, like broad-based indexes, attempt to measure the performance of the entire market. While other indexes, like narrow-based indexes, attempt to measure only a specific sector of the market. To learn more about stock indexes, view this week's segment of "Ask the Institute."