References to sharemarket activity can be heard on the television news every night. This information can provide a simple and easy way of following the market if you understand the meaning of the information provided. For example, a typical sharemarket report may sound like this:
After a slow start, turnover on the sharemarket was strong today, with the All Ords finishing up 53 points due to a strong rise in the 20 leaders index. In America, the Dow Jones was flat but NASDAQ continued its strong run.
What does this all mean? We will come back to this news report at the end of the chapter.
This is where it is helpful to know how indices are constructed and what they are measuring.
A sharemarket index ...