Equity: Security Market Indexes Flashcards
Constituent securities
With respect to an index, the individual securities within an index
Divisor
A number(denominator) used to determine the value of a price return index. It is initially chosen at the inception of an index and subsequently adjusted by the index provider, as necessity to avoid changes in the index value that are unrelated to changes in the prices of it constituent securities
Equal Weighting
An index weighting method in which an equal weight is assigned to each constituent security at inception
Float-Adjusted market-capitalization weighting
An index weighting method in which the weight assigned to each constituent security is determined by its market capitalization for its market float
Fundamental weighting
An index weighting method in which the weight assigned to each constituent security is based on its underlying company size l. It attempts to address the disadvantages of market-capitalization weighting by using measures that are independent of the constituent security’s price
Hedge Funds
Private investment vehicles that typically use leverage, derivatives, and long and short investment strategies.
Market-Capitalization Weighting
An index weighting method in which the weight assigned to each constituent security is determined by dividing its market capitalization by the total market capitalization (sum of market capitalization) of all securities in the index
Market Float
The number of shares that are available to the investing public
Multi-market indexes
Comprised of indexes from different countries,designed to represent multiple security market.
Price index
Represents the average prices of a basket of goods and services
Price return
Measures only the price appreciation or percentage change in price of the securities in an index or portfolio
Price return index
An index that reflects only the price appreciation or percentage change in price of constituent securities.
Price weighting
An index weighting method in which the weight assigned to each constituent is determined by dividing its price by the sum of all prices of the constituent securities
Rebalancing
Adjusting the weights of the constituent securities in an index
Sector indexes
Indexes that represent and trade different economic sectors-such as consumer goods, energy, finance, health care, and technology on either a national, regional, or global basis
