Index

Index is a basket of securities selected to represent the market (or its section) and is used as a benchmark for investors, showing whether a given investment has out- or underperformed the index. There are different methodologies for index construction (market cap-weighted, price-weighted, free float-weighted etc). Indices can be national (e.g. FTSE 100 in the UK or S&P 500 in the US), regional (e.g MSCI Europe) or global (e.g MSCI World). The most popular and well-known indices (FTSE 100, S&P 500, CAC40, Stoxx 600) represent the largest companies in the given economy and are used as benchmarks for the wider economy, but there are indices for other sections of the stock market as well (e.g. small- or mid-cap indices).

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