Description of a security market index

CFA level I / Equity Investments: Market Organization, Market Indices, and Market Efficiency / Security Market Indices / Description of a security market index

46.a: Description of a security market index

Security Market Index Definition: A security market index tracks the market performance of an asset class. An index can be thought of as a basket of securities belonging to a particular class such as stocks, commodities, currencies etc. also known as constituent securities. The value of an index is calculated using the market value of its constituents at any given time.

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