Market index

A measure of change in the value of a specific group of shares, bonds or other investments that the market index tracks from a specific starting point The purpose of an index (in most cases) is to replicate the returns accumulated from a proportional holding in every security included as a constituent of the index. Indices generally use index numbers to allow return comparisons. Index numbers are created by starting a portfolio at an arbitrary value (100 or 1000) and incrementing them each day by the portfolio’s daily return as a percentage of the starting value. In Australia, the most frequently used market indices for assessing fixed income performance are the Bloomberg family of fixed interest indices.

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