An index is a group of companies and their stock prices are averaged by including each company’s total number of shares in the calculation. Popular indices are: DJI (Dow Jones Industrial Average) which consists of 30 of the largest NYSE and NASDAQ stocks. S&P 500 (Standard and Poor’s) which consists of 500 of the largest NYSE and NASDAQ stocks. NASDAQ Composite which includes all stocks listed on NASDAQ. The S&P 500 and the NASDAQ Composite are weighted which means that the larger companies contribute a greater proportion to the average calculation. So a stock ranked no.1 contributes more to the calculation than a stock ranked No.100.
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