Definition:
What is an index?
An index is like a ruler. It is a way of measuring the performance, or price movement, of publicly traded stocks.
The S&P 500 index tracks the performance of stocks of 500 of the largest companies in the United States.
The Russell 2000 index tracks the performance of smaller, publicly traded companies.
The MSCI EAFE index (EAFE stands for Europe, Asia, Far East) measures the performance of stocks in developed countries outside of the United States.
The Dow Jones Index, tracks the performance of only 30 companies. These 30 companies are selected from different industries to represent the largest and most widely held publicly traded companies in the Unites States.
