Friday, February 4, 2011

Market indices explained!!

Why market indices are important? We all know that market index is some sort of average of its constituents and it reflects the overall market movement. And they are generally used to gauge the direction of economy, overall economic activity, they are also used to measure the performance of various mutual fund schemes as the benchmark performance. These market indices may be classified into price weighted, value/market weighted and equal weighted indices. The following video link explains how they are constructed? how the return on such indices are calculated? and what happens when there is change in the magnitude of the constituents? [LINK]

Readers who undergone the 'Investments' course, may use this talk as refreshing......otherwise it is very educating!! 

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