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Question

What is a stock index?

Answer

Stock market indices (e.g. FT 100 on the FTSE) are measurement tools.  They are used by investors to track the market, gauge its performance and then consider the implications of its ups and downs.  Indices are useful because they sketch a broad picture of market trends.  Knowing how to read individual stock prices from the financial press is important, but it is equally important to follow general stock market trends, since individual stock prices can perform quite differently from the market as a whole.

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