Usually an index that tracks a large amount of stocks traded on a stock exchange or a nation’s stock market.

For example,  the Nasdaq Composite Index is composed of over 5000 stocks traded on the Nasdaq. The NYSE Composite Index covers all the stocks traded on the NYSE. However, they are market-capitalization weighted, which means larger firms have a larger influence on market movements.

A composite index can be argued to be more comprehensive than the Dow Jones Industrial Average(which contains 30 stocks) and the S&P 500(which contains around 500 stocks.) as it contains far more stocks.

Related Terms

• Capitalization-weighted Index
• Index Fund
• Index Option
• Index
• Baltic Dry Index
• US Dollar Index

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