7.01.2005

Q&A: List some of the market index differences...

...between bond market and stock market.

  • Bond market indexes are typically computed
    • using value-weighting based on the outstanding amount of par value of the underlying issues
    • based on total return as opposed to capital gain
    • using prices quoted by traders.
  • Stock market indexes
    • use a variety of weighting methods,
    • usually measure only price change
    • and use actual trade prices.

Bonus Points

  • Most of the major international stock indices are computed using value-weighting.
  • One of the most comprehensive stock market index is Wilshire 5,000 Equity Index. Comprising 5,000 equity securities. Includes all New York Stock Exchange and American Stock Exchange issues and the most active over-the- counter issues. Represents the total dollar value of all 5,000 stocks.

Category: C++ Quant > Financial Markets

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