A market index point is a concept of the financial industry used everyday in exchanges around the world - the marketplaces of stocks, bonds, and other types of financial instruments or securities. Understanding a market index point, however, first requires understanding the meaning of a market index.
What is an Index?
According to Investorwords, an index is "a statistical indicator providing a representation of the value of the securities which constitute it." The S&P 500 Index is an example.
What is a Market Index?
A market index is therefore an index that represents the values of a particular market. In other words, it "measures price changes of an overall market, such as a stock market or bond market," says Investorwords.
The Market Index Point
A point in a market index is a concept used to measure the value of the securities listed in the index. However, the point will have a different meaning depending on whether it is a stock market index or a bond market index.
Point: Stock Market Index
When referring to stocks and stock market indexes, a "point" is equivalent to $1.
Point: Bond Market Index
When referring to bonds and bond market indexes, a "point" is equivalent to $10 because every bond price is actually equal to a percentage of $1,000.
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