Business, Legal & Accounting Glossary

Definition: Index


Quick Summary of Index

A statistical indicator providing a representation of the value of the securities which constitute it. Indices often serve as barometers for a given market or industry and benchmarks against which financial or economic performance is measured.

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).

Related Phrases

Arms Index,
broad-base index
EAFE Index
Hang Seng Index
high-low index
Jensen index
market index
market-share weighted index
market-value weighted index
NASDAQ Composite Index
Nikkei Index
NYSE Composite Index
passive management
price index
price-weighted index
pure index fund
relative volatility
Russell 2000
Wilshire 5000 Equity Index
benchmark risk
Employment Cost Index
market volatility index
Standard & Poor's 100

Cite Term

To help you cite our definitions in your bibliography, here is the proper citation layout for the three major formatting styles, with all of the relevant information filled in.

Page URL
Modern Language Association (MLA):
Index. Payroll & Accounting Heaven Ltd.
November 29, 2023
Chicago Manual of Style (CMS):
Index. Payroll & Accounting Heaven Ltd. (accessed: November 29, 2023).
American Psychological Association (APA):
Index. Retrieved November 29, 2023
, from website:

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: 5th November, 2021 | 0 Views.