Index

Business, Legal & Accounting Glossary

Definition: Index



What is the dictionary definition of Index?

Dictionary Definition


A numerical scale used to compare variables with one another or with some reference number.


Full Definition of Index


An index is a hypothetical basket of securities or economic variables designed to track changes over time. The most common type of index tends to be the stock index such as the Dow Jones Industrial Average and the S&P 500 Index. Each index has its own methodology for calculating the effect of individual index components. The Dow Jones, for example, treats its 30 stocks identically; a rise of $1 in the stock of a $300B company affects the index in exactly the same way as a rise of $1 in the stock of a $30M company stock. Other indexes make varying degrees of adjustments to account for the differences in company size.

Indexes can track market characteristics instead of market values. For example, the Volatility Index (VIX) measures options premiums to determine the market’s expectation for future volatility. There are also economic indices that track measures of economic health, such as the Consumer Price Index (CPI).


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Index. PayrollHeaven.com. Retrieved July 04, 2020, from PayrollHeaven.com website: https://payrollheaven.com/define/index/

Definition Sources


Definitions for Index are sourced/syndicated and enhanced from:

  • A Dictionary of Economics (Oxford Quick Reference)
  • Oxford Dictionary Of Accounting
  • Oxford Dictionary Of Business & Management

This glossary post was last updated: 15th February, 2020 | 13 Views.