Shares are sold, as a rate of the capital, which are the part of the property of the company. When the shares of the company are traded on the open market, the company share capital by the total number of shares on the market. Thus, the value of each share is equal to the percentage of capital that it represents. As the total capital of the corporation grows and the cost of each of its shares goes up. Thus, when you own shares in a company and if the company’s profits grow, you also get a profit.
The index is a portfolio that includes stocks traded in the same area of the economy or stock market. All indexes such as the NASDAQ or the Dow Jones Industrial Average, serve for tracking the effectiveness of certain influential companies to assess and predict trends in the economy. Indexes – an easy way to estimate the value of a certain part of the stock market.
Indexes are divided into many different classes. Global Index, as its name implies, involves influential companies, with no regard to its location. National Influence Index assesses countries on a particular stock market. National Indexes can give an idea about the condition of the country’s economy.
There are also indicators that assess the condition of the specific market sectors. An example is the index of pharmaceutical and biotechnology companies. Other types of indexes track the success of companies, based on their size, the type of control and much more.
Some indicators are have many variations in which fluctuations in share prices are classified differently. An example is a stock index of 500 stocks of companies, which is calculated and published by the agency “Standard and Poor’s” (S & P). Such indexes may vary depending on several factors, including its evaluation and the distribution of the dividends of its components.