Index

An index is a statistical measure that represents the performance of a group of assets, such as stocks, bonds, or commodities.

Explanation

Indexes are used to track the performance of specific segments of the market. They can be broad, covering an entire market, or narrow, focusing on specific sectors or industries.

Practical Example of an Index

A fund manager uses the Dow Jones Industrial Average (DJIA) index to compare the performance of their portfolio against the 30 major U.S. companies included in the DJIA.

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