Index Funds and ETFs

Index funds are designed to track a specific benchmark. The benchmarks are often widely published, rebalance annually (also known as reconstitution), and focus on a specific section of the marketplace. Index funds are designed to be low-cost, transparent and come close to the performance of the benchmark (less expenses).

A company's stock price is not "calculated." At the end of the day it merely represents the exact price at which the last transaction took place. The last price of the day is the price of last share or shares that exchanged hands between an buyer and a seller before the 4pm ET close M-F. The price of a company's stock during the day before the 4pm ET close is just the price at which the last transaction took place at that exact moment in time. There is no calculation ever.

A Market Cap weighted index is calculated a lot like a school teacher weighs grades. Example: Quiz: 20%

Homework: 20%

Final Paper: 60% So if you got a 80% on your quiz, a 90% on your homework and a 70% on your final your grade would be: 80(.2)+90(.2)+70(.6)= 76% (as compared to 80% without weight) So for a weighted market cap index if you have 3 companies A, B, and C, and each is a different size, then the idea is the largest companies have the largest effect on the total "weighted" result. Conversely the smaller companies will have a smaler effect; in much the same way that your homework matters less than your final in our imaginary school.

Fabrique Nationale de Herstal

The stock exchange index is a relative measure of the performance of all or a number of stocks that are traded on a stock exchange. it incorporates the return on stocks, their volumes traded and the shares outstanding. there can be a number of indices relating to a single stock exchange that incorporates the returns on a number of companies. they can also be differentiated on the basis of the return on different industries.

the Security Exchange Commission (SEC)