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Posted by Evans Kiplangat 5 years ago In:

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Evans Kiplangat
Evans Kiplangat Asked:

How is a share index calculated, like Dow Jones, Nikkei, NSE 20 Share Index?

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JtotheA
JtotheA Answered:

Usually these are price-weighted averages of a select number of actively traded firms that are market actors for the specified index commodity.  Firms are usually selected based on market share, liquidity, and market grouping.

Many indexes calculate out on the closing day. 

If one firm out of firms selected tanks or is removed from trading, then a new firm is found that is more indicative of the current marketplace.

Each index will have it's own specific formula, and is accurately defined by the owning firm.  For instance, Standard and Poor, NASDAQ and others display on their definition pages how this is done.

For example: http://www.nasdaq.com/reference/glossary.stm 

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Femalesoldier
Femalesoldier Answered:

Here is another website you may use for reference as well the excellent references already provided.

www.investopedia.com/articles/02/082702.asp 

I'll search, while you wait.
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tina
tina Answered:

what is 20 index?please reply fast

 

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tina
tina Answered:

what is a 20 index in a stock exchange market

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