Example of stock market index, Finance Basics

Example of Stock Market Index

The following six companies constitute the index of democratic republic of Kusadikika.

            Company

 A

 B

 C

 D

 E

 F

 Today's share price

 20

 52

 83

 12

 78

 100

 Yesterday's share price

 25

 53

 83

 10

 75

 96

Calculate the stock market index for today.

In construction or computation of stock index the following should be considered:

1. Option to choose of base year on such to base the price changes

2. The choice of representative securities or firms

3. Combining the securities or firms to construct the index as like employ of geometric mean

4. Employ of appropriate weight to be attached to the securities depending upon their relative significance.

5. The weights or number of firms in a sector is remained constant over a reasonably long duration.

Posted Date: 2/1/2013 1:19:33 AM | Location : United States







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