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sample essay, My Index

Indices are measures of statistics used in businesses to measure the change in market security. They are imaginary portfolios of stock that are used to represent a certain market of section of it. Indices are used to show the performance of several equities in a business and not just a single equity. In short, indices are diversified. In addition, an index shows the role played a certain class of business assets. They are also used to provide securities for administration and derivatives.

In investing my imaginary money, I would prefer to use stock index. A stock index is a collection of stocks which represent part of an exchange or the entire exchange, Amex.com. 2010. I chose to use stock index because of the regulations that are set to convince a particular criteria. In order to use stock index, a selection is made on the investments in the index. In addition, calculations are done on the weighting of the components of the index as well as observing the rules and regulations of the stock index Sathyamurthy.com 2010. More so, stock index are appropriate for investing since they give guidelines for adjustments to preserve consistency in the investment, Kyle T 2010. I also settled on stock index because they help to reveal the performance of index through exchange traded funds and mutual funds. In choosing the stock index, I used the criteria of screening out inferior mutual fund performance. This helped me to choose on stock index which have low costs and high turn over.

To invest in stock index, one has to make calculations in order to know how much to invest. Calculating stock index involves knowing the value of weighted indices Russell, L. 2010. To get the value of stock index, one needs to multiply the price of stock with the total number of shares and the stock index divisor. I would choose to invest $ 4750. This figure fits into my portfolio of $95,000 because it shows the figure of free float adjustment factor.
References:
Amex.com American Stock Exchange. 2010. Web. Retrieved on 14th December 2010. Kyle T. Which Vanguard International Index Fund Is Best? 2010. Web. Retrieved on 14th

December 2010.
Sathyamurthy.com. How to pick the Best Noload Mutual Funds and ETFs. 2010. Web.

Retrieved on 14th December 2010.
Russell, L. 7 Scientific Mutual Fund and ETF Screening Criteria. 2010. Web. Retrieved

On 14th December 2010.

 

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