Selected indices and averages are also used as the underlying value of stock index futures, index options, or options on index futures; these derivative instruments enable investors to hedge a position against general market movement at relatively low cost. An extensive number and variety of indices and averages exist. Among the best known and most widely used are
AMEX Composite Index (XAX): introduced in January 1997, it is a market capitalization-weighted, price appreciation index with a base level of 550 as of December 29, 1995. XAX reflects the aggregate market value of all of its components relative to their aggregate value on December 29, 1995. The index includes common stocks, or american depositary receipts of all AMEX-listed companies, REITs, master limited partnerships, and closed-end investment funds. Each component’s market value is determined by multiplying its price by the number of shares outstanding. The day-to-day price change in each issue is weighted by its market value at the start of the day as a percent of the total market value for all components. The level of the index is not altered by stock splits, stock dividends, trading halts, new listings, additional issuances, delistings, or suspensions.
www.amex.com.
AMEX Major Market Index (XMI): american stock exchange’s price-weighted average of 20 blue chip industrial stocks representative of major U.S. corporations; several of the stocks are components of the dow jones industrial average (DJIA). The index was established with a base value of 200.00 as of April 29, 1983. Futures on the XMI Index are traded on the chicago board of trade. Options on the index are traded on Amex, and are traded under license on Euronext.
www.amex.com.
Dow Jones Industrial Average: price-weighted average of 30 actively traded blue chip stocks, it is the oldest and most-quoted market indicator, first published on May 26, 1896. The Dow is prepared and published by Dow Jones Indexes, a unit of Dow Jones & Co. The Dow’s components, which were once entirely industrial companies, have shifted with market dynamics and now represent a range of industries, including telecommunications, technology, consumer services, and financials. The components generally represent 20%–25% of the market value of U.S. stocks. The Dow is calculated by adding the trading prices of the component stocks and using a divisor adjusted for stock dividends and splits, cash equivalent distributions equivalent to 10% or more of the closing prices of an issue, and substitutions and mergers. The average is quoted in points, not dollars. The Dow underlies a variety of investment products, inlcuding one of the largest U.S. exchange-traded funds, diamonds, which are are traded on the american stock exchange. Other averages similarly maintained by Dow Jones Indexes are the Dow Jones Transportation Average —20 stocks representative of the airline, trucking, railroad, and shipping businesses ( see also dow theory); and the Dow Jones Utility Average —15 geographically representative gas and electric utilities.
The combination of the three averages encompasses 65 stocks and is known as the Dow Jones Composite Average .
www.djindexes.com.
Dow Jones STOXX Indices: STOXX Ltd. is a joint venture of Deutsche Boerse AG, Dow Jones & Company, and the SWX Group the development, maintenance, distribution, and marketing of the Dow Jones STOXX indices. The cornerstone of the STOXX success story are the DJ STOXX blue chip indices. The DJ STOXX 50 (covering the largest sector leaders in Europe), the DJ EURO STOXX 50 (covering the largest sector leaders in the Eurozone), the DJ STOXX EU Enlarged 15 (providing a representation of the largest companies in the ten new member states that joined the European Union in 2004) and the DJ STOXX NORDIC 30 (covering the largest sector leaders in the Nordic region).
The DJ STOXX blue chip indices are derived from the DJ STOXX 600 index (with the exception of the DJ STOXX EU Enlarged 15 Index), a broader market index that combines the DJ STOXX Large 200, Mid 200, and Small 200 size indices. The DJ STOXX 600 contains the 600 largest stocks of the DJ STOXX Total Market index. The DJ STOXX TMI and the DJ EURO STOXX TMI cover 95% of the free float market capitalization of the European and Eurozone markets and are further subdivided into Size and Style indices.
The DJ STOXX 600 is the European sub-index of the DJ STOXX Global 1800. The DJ STOXX Americas 600 and the DJ STOXX Asia/Pacific 600 are their complementary counterparts; in combination they create the DJ STOXX Global 1800. All three regional indices cover the largest stocks of the developed countries in their respective regions. Further regional subsets and sector indices of the DJ STOXX Global 1800 are also calculated. The DJ STOXX Global 1800 is directly derived from the DJ World Index, consisting of approximately 5,500 stocks and covering 95% of the world’s free float market capitalization.
Dow Jones Titans Indices: blue chip indices representing various countries, regions, and sectors. The flagship index of the family, the Dow Jones Global Titans 50 Index, was created to reflect the globalization of international blue chip securities in the wake of mergers and the creation of mega-corporations. The components are large-cap companies with at least some of their operations outside of their domestic markets.
Dow Jones Sector Titans Indices represent 18 global industries such as financial services, chemicals, health care, and technology. The Dow Jones Titans family also includes country and regional indices that track the biggest and most liquid stocks traded in individual countries and regions. Each index in the Dow Jones Titans family is contructed by selecting stocks from broad-based indices maintained by Dow Jones Indices.
www.djindexes.com .
Dow Jones Wilshire 5000 is the broadest available measure of the U.S. stock market. It includes all stocks traded on the New York Stock Exchange, the American Stock Exchange, and Nasdaq with readily available prices. The index was created in the 1970s by Wilshire Associates and was originally called the Wilshire 5000. In 2004, Dow Jones Indices and Wilshire Associates teamed up to cobrand the index and create a float-adjusted version that reflects only those stock shares available to investors. Dow Jones and Wilshire also maintain a full complement of subindices representing various sectors and industries, investment styles (growth and value) and size segments (large-cap, mid-cap, small-cap, and micro-cap).
NASDAQ Composite Index: market value-weighted index that measures all domestic and non-U.S.-based securities—approximately 3,200 companies—listed on the nasdaq Stock Market. The index was introduced on February 5, 1971, with a base value of 100. The market value—the last-sale price multiplied by total shares outstanding—is calculated through the trading day, and is related to the total value of the index. Each security in the Index is assigned to a nasdaq subindex: Bank, Biotechnology, Computer, Health Care, Industrial, Insurance, Other Finance, Transportation, and Telecommunications. Values for the subindices began in February 1971, except for Biotechnology, Computer, and Telecommunications, which started November 1, 1993, and Health Care that started on July 12, 2005.
www.nasdaq.com .
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Dictionary of Finance and Investment Terms. Copyright © 2010 by Barron's Educational Series, Inc. All rights reserved.
