I’m glad this was shared by investopedia.com in their “Term of the day”. It just reminded me of a question I was asked by a blog reader this weekend. He asked.. I hear Index traded securities, Index Linked Bonds etc.. what at all is an Index.
Index An index is an indicator or measure of something, and in finance, it typically refers to a statistical measure of change in a securities market. In the case of financial markets, stock and bond market indices consist of a hypothetical portfolio of securities representing a particular market or a segment of it. ”
In Ghana for instance, the GSE Composite Index (GSE CI) is a form of Index including all listed companies. The Financial Stock Index (GSE FI) is another that includes all financial (banks etc) companies listed.