Business Glossary

indicators used to measure and report value changes in representative stock groupings. Strictly speaking, an average is simply the arithmetic mean of a group of prices, whereas an index is an average expressed in relation to an earlier established base market value. (In practice, the distinction between indices and averages is not always clear; the AMEX Major Market Index is an average, for example.) Indices and averages may be broad based-comprised of many stocks representative of the overall market -or narrowly based, meaning they are composed of a smaller number of stocks reflecting a particular industry or market sector. Selected indices and averages are also used as the underlying value of stock index futures, index options, or options on index futures; these derivative instruments enable investors to hedge a position against general market movement at relatively low cost. An extensive number and variety of indices and averages exist. Among the best known and most widely used are
AMEX Composite Index (XAX): introduced in January 1997, it is a market capitalization-weighted, price appreciation index with a base level of 550 as of December 29, 1995. XAX reflects the aggregate market value of all of its components relative to their aggregate value on December 29, 1995. The index includes common stocks, or American Depositary Receipt of all AMEX-listed companies, REITs, master limited partnerships, and closed-end investment funds. Each component's market value is determined by multiplying its price by the number of shares outstanding. The day-to-day price change in each issue is weighted by its market value at the start of the day as a percent of the total market value for all components. The level of the index is not altered by stock splits, stock dividends, trading halts, new listings, additional issuances, delistings, or suspensions. www.amex.com.
AMEX Major Market Index (XMI): American Stock Exchange's price-weighted average of 20 blue chip industrial stocks representative of major U.S. corporations; several of the stocks are components of the dow jones industrial average (DJIA). The index was established with a base value of 200.00 as of April 29, 1983. Futures on the XMI Index are traded on the Chicago Board Of Trade. Options on the index are traded on Amex, and are traded under license on Euronext. www.amex.com..
Dow Jones Industrial Average: price-weighted average of 30 actively traded blue chip stocks, it is the oldest and most-quoted market indicator, first published on May 26, 1896. The Dow is prepared and published by Dow Jones Indexes, a unit of Dow Jones & Co. The Dow's components, which were once entirely industrial companies, have shifted with market dynamics and now represent a range of industries, including telecommunications, technology, consumer services, and financials. The components generally represent 20%-25% of the market value of U.S. stocks. The Dow is calculated by adding the trading prices of the component stocks and using a divisor adjusted for stock dividends and splits. cash equivalent distributions equivalent to 10% or more of the closing prices of an issue, and substitutions and mergers. The average is quoted in points, not dollars. The Dow underlies a variety of investment products, inlcuding one of the largest U.S. exchange-traded funds, diamonds, which are are traded on the American Stock Exchange. Other averages similarly maintained by Dow Jones Indexes are the Dow Jones Transportation Average-20 stocks representative of the airline, trucking, railroad, and shipping businesses (see also dow theory); and the Dow Jones Utility Average-15 geographically representative gas and electric utilities. The combination of the three averages encompasses 65 stocks and is known as the Dow Jones Composite Average. www.djindexes.com.
Dow Jones STOXX Indices: STOXX Ltd. is a joint venture of Deutsche Boerse AG, Dow Jones & Company, and the SWX Group the development, maintenance, distribution, and marketing of the Dow Jones STOXX indices. The cornerstone of the STOXX success story are the DJ STOXX blue chip indices. The DJ STOXX 50 (covering the largest sector leaders in Europe), the DJ EURO STOXX 50 (covering the largest sector leaders in the Eurozone), the DJ STOXX EU Enlarged 15 (providing a representation of the largest companies in the ten new member states that joined the European Union in 2004) and the DJ STOXX NORDIC 30 (covering the largest sector leaders in the Nordic region).

The DJ STOXX blue chip indices are derived from the DJ STOXX 600 index (with the exception of the DJ STOXX EU Enlarged 15 Index), a broader market index that combines the DJ STOXX Large 200, Mid 200, and Small 200 size indices. The DJ STOXX 600 contains the 600 largest stocks of the DJ STOXX Total Market index. The DJ STOXX TMI and the DJ EURO STOXX TMI cover 95% of the free float market capitalization of the European and Eurozone markets and are further subdivided into Size and Style indices.

The DJ STOXX 600 is the European sub-index of the DJ STOXX Global 1800. The DJ STOXX Americas 600 and the DJ STOXX Asia/Pacific 600 are their complementary counterparts; in combination they create the DJ STOXX Global 1800. All three regional indices cover the largest stocks of the developed countries in their respective regions. Further regional subsets and sector indices of the DJ STOXX Global 1800 are also calculated. The DJ STOXX Global 1800 is directly derived from the DJ World Index, consisting of approximately 5,500 stocks and covering 95% of the world's free float market capitalization.
Dow Jones Titans Indices: blue chip indices representing various countries, regions, and sectors. The flagship index of the family, the Dow Jones Global Titans 50 Index, was created to reflect the globalization of international blue chip securities in the wake of mergers and the creation of mega-corporations. The components are large-cap companies with at least some of their operations outside of their domestic markets. Dow Jones Sector Titans Indices represent 18 global industries such as financial services, chemicals, health care, and technology. The Dow Jones Titans family also includes country and regional indices that track the biggest and most liquid stocks traded in individual countries and regions. Each index in the Dow Jones Titans family is contructed by selecting stocks from broad-based indices maintained by Dow Jones Indices. www.djindexes.com.
Dow Jones Wilshire 5000 is the broadest available measure of the U.S. stock market. It includes all stocks traded on the New York Stock Exchange, the American Stock Exchange, and Nasdaq with readily available prices. The index was created in the 1970s by Wilshire Associates and was originally called the Wilshire 5000. In 2004, Dow Jones Indices and Wilshire Associates teamed up to cobrand the index and create a float-adjusted version that reflects only those stock shares available to investors. Dow Jones and Wilshire also maintain a full complement of subindices representing various sectors and industries, investment styles (growth and value) and size segments (large-cap, mid-cap, small-cap, and micro-cap).
NASDAQ Composite Index: market value-weighted index that measures all domestic and non-U.S.-based securities-approximately 3,200 companies-listed on the NASDAQ Stock Market. The index was introduced on February 5, 1971, with a base value of 100. The market value-the last-sale price multiplied by total shares outstanding-is calculated through the trading day, and is related to the total value of the index. Each security in the Index is assigned to a NASDAQ Stock Market subindex: Bank, Biotechnology, Computer, Health Care, Industrial, Insurance, Other Finance, Transportation, and Telecommunications. Values for the subindices began in February 1971, except for Biotechnology, Computer, and Telecommunications, which started November 1, 1993, and Health Care that started on July 12, 2005. www.nasdaq.com.
NASDAQ-100 Index: a market capitalization weighted index representing the largest and non-financial domestic and international securities listed on The NASDAQ Stock Market. The index reflects companies across major industry groups including computer hardware and software, telecommunications, retail/wholesale trade, and biotechnology. Financial companies, including investment companies, are not included. The index is calculated under a modified capitalization-weighted methodology. The index was introduced on January 31, 1985, with a base of 250. On January 1, 1994, the Nasdaq-100 base was reset by division of a factor of 2 to 125. To be eligible, a security must have a minimum average daily trading volume of 200,000 shares and be listed on NASDAQ Stock Market for at least two years among other criteria. Foreign securities must be eligible for listed options trading. A ranking review is performed annually in December.NASDAQ Stock Market- 100 futures and options on futures trade on the chicago mercantile exchange. The NASDAQ Stock Market-100 option trade on CBOE, AMEX ,and ISE, and is a European-style Option that can be exercised on its expiration date only. www.nasdaq.com.
The NYSE Composite Index (NYA): relaunched in January 2003 under a new methodology and recalculated to a base value of 5,000, outperformed all broad-based indices in 2004. Designed to measure the performance of all common stocks, ADRs, REITs, and tracking stocks listed on the NYSE, the index represents 77% of the total U.S. market capitalization and 64% of the total global market capitalization.
PSE/PCX 100 Index: price-weighted, broad-based index representing 100 listed and over-the-counter stocks from 15 different industries- including computer hardware, software, semiconductors, telecommunications, data storage and processing, electronics, and biotechnology. The index measures the performance of the technology sector of the U.S. equities market, and is considered the industry benchmark. It is used by mutual fund rating services and analysts to gauge the overall performance of the technology sector of the U.S. equities market. The Pacific Exchange has maintained the index since 1982. Options are traded on the Pacific Exchange. www.pacificex.com.
Russell Indices: float market capitalization-weighted U.S. equity indices published by Russell Investment Group of Tacoma, Washington. The Russell 3000 Index measures the performance of the 3,000 largest U.S. companies based on market capitalization, representing about 99% of the investable U.S. equities market. The 1,000 highest-ranking stocks in this index comprise the Russell 1000® Index. The Russell 2000 Index consists of the 2,000 smallest companies in the Russell 3000 Index. The Russell Top 200® Index measures performance of the 200 largest companies in the Russell 1000, while the Russell 2500 Index measures performance of the 2,500 smallest companies in the Russell 3000 Index. Growth indices on the Russell Indices measure performance of the respective companies with higher price/book ratios and higher forecasted growth values. Value indices on the Russell Indices measure performance of those companies with lower price/book ratios and lower forecasted growth values. Futures and/or options on some of the indices or associated exchange-traded funds are traded on the Chicago Board Of Trade, Chicago Board Options Exchange, the New York Board of Trade, International Securities Exchange, eurex US, American Stock Exchange, CBOE futures exchange, chicago mercantile exchange, Pacific Exchange, and Philadelphia Stock Exchange (PHLX). www.russell.com.See also russell indices.
S&P 500 Index: widely regarded as the best single gauge of the U.S. equities market; commonly known as the Standard & Poor's 500 (or S&P 500). This world-renowned index includes a representative sample of 500 leading companies in leading industries of the U.S. economy. Although the S&P 500 focuses on the large-cap segment of the market, with more than 80% coverage of U.S. equities, it is also an ideal proxy for the total market. More than $4 trillion is benchmarked against the S&P 500 and more than $1 trillion is directly invested in the index. The selection of stocks, their relative weightings to reflect differences in the number of outstanding shares, and publication of the index itself are services of standard & poor's. Stocks in the index are chosen for market size, liquidity, and industry group representation. Like all S&P indices, the S&P 500 is classified according to the Global Industry Classification System (GICS), which consists of 10 sectors- Energy, Materials, Industrials, Consumer Discretionary, Consumer Staples, Health Care, Financials, Information Technology, Telecommunications Services, and Utilities. In terms of market capitalization, the largest sectors in the S&P 500 are Financials, Information Technology, and Health Care. The composition of the 500 stocks is continuously updated and the number of issues in each sector varies over time so that the index constantly reflects the sectoral makeup of the market and economy. Standard & Poor's also publishes several other important indices including the S&P MidCap 400, the S&P SmallCap 600, and the S&P 1500 Composite Index, which totals the S&P 500, 400, and 600 indices and which represent approximately 90% of the total market capitalization of stocks traded in the U.S. equity market. S&P also maintains more than 90 individual industry indices. www.indices.standardandpoors.com.
S&P Global 1200 Index: the first real-time, free-float weighted world index, covering 29 countries and approximately 70% of global market capitalization. It is comprised of seven regional indices: the S&P 500; S&P/TSX 60 (Canada); the S&P Latin America 40 (Mexico, Brazil, Argentina, Chile); the S&P/TOPIX 150 (Japan); the S&P Asia 50 (Hong Kong, Korea, Singapore, Taiwan); the S&P/ASX 50 (Australia) and the S&P Europe 350. The European index is divided into three subindices: the S&P Euro, covering the Euro zone markets; the S&P Euro Plus, adding Denmark, Norway, Sweden, and Switzerland; and the S&P United Kingdom. Constituents of the S&P Global 1200 are selected to ensure sectoral and country balance. Constituent weights are determined by a company's free-float market capitalization: corporate cross-holdings, government ownership, strategic holders, and foreign investment restrictions are removed. The component indices are maintained by an index committee consisting of Standard & Poor's worldwide staff, using the same index governance and maintenance principles used by the S&P 500. Standard & Poor's collaborates with the Toronto Stock Exchange the Tokyo Stock Exchange, and the Australian Stock Exchange on maintenance of the Canada, Japan, and Australia indices, respectively. Exchange-traded funds are available on the S&P 500, S&P Europe 350, S&P/TSX 60, S&P/ASX 50, and the S&P Latin America 40. Futures and options are traded on the S&P 500, the S&P/TSX 60, and the S&P/ASX 50. Like all S&P indices, the S&P Global 1200 is classified according to the Global Industry Classification System (GICS), which consists of 10 sectors- Energy, Materials, Industrials, Consumer Discretionary, Consumer Staples, Health Care, Financials, Information Technology, Telecommunications Services, and Utilities. In terms of market capitalization, the largest sectors in the S&P 500 are Financials, Information Technology, and Health Care. The largest, in terms of market capitalization, is Financials. Other top sectors represented are Consumer Discretionary, Health Care, and Information Technology. Among the smallest are Utilities, Materials, Telecommunications Services, and Energy. www.indices.standardandpoors.com.
Standard & Poor's 100 Index (OEX): market-capitalization weighted index of 100 major, blue chip stocks across diverse industry groups. The index is a sub-set of the S&P 500 and measures largecompany U.S. stock market performance. Options on the S&P 100 Index are listed on the Chicago Board Options Exchange. Its components are mainly NYSE industrials, with some transportation, utility, and financial stocks. www.indices.standardandpoors.com.
Value Line Composite Averages: equally weighted arithmetic and geometric averages of approximately 1700 NYSE, AMEX, and NASDAQ stocks tracked by the value line investment survey. The stocks cover more than 90 industries, the stock markets, and the economy. The averages use a base value of 100, established June 30, 1961; changes are expressed in index numbers rather than dollars and cents. Value Line also offers three sector indices: the Value Line Geometric Industrial Average, Value Line Geometric Rail Average, and Value Line Geometric Utilities Average. The Kansas City Board of Trade trades Value Line Stock Index futures and options. www.valueline.com.

Many indices and averages track the performance of stock markets around the world. The major indices and exchanges that offer them include:all ordinaries index; Athens Stock Exchange; Bolsa De Commercio De Santiago; bolsa de madrid; Bolsa Mexicana de Valores; BOVESPA; borsa italiana; Cac 40 Index; EAFE index; euronext; hang seng index; Johannesburg Stock Exchage; bursa malaysia; London Stock Exchange; Morgan Stanley Capital International indices; new zealand exchange limited; OMX; Oslo Stock Exchange; Singapore Exchange Limited; Stock Exchange of Thailand (SET); swx; Tokyo Stock Exchange; Tel-Aviv Stock Exchange; Toronto Stock Exchange (TSX) and Wiener Borse Ag.

organized, national exchanges where securities, options, and futures contracts are traded by members for their own accounts and for the accounts of customers. In the United States, the stock exchanges are registered with and regulated by the Securities and Exchange Commission (SEC); the commodities exchanges are registered with and regulated by the Commodity Futures Trading Commission (see regulated commodities); where options are traded on an exchange, such activity is regulated by the SEC.

stocks, bonds, subscription rights, subscription warrants, stock option, index options, and other derivative products are traded on various stock exchanges in the United States as well as over the counter. commodity futures, futures option, and financial future are traded on commodities exchanges and also over the counter.

Exchanges listing basic securities-stocks, bonds, rights, warrants, and options on individual stocks-are described in more detail under their respective entries. See below for a description of their futures and other options products:American Stock Exchange (New York) stock index options: Airline Index, China Index, Defense Index, Gold Bugs Index, Test Symbol, Computer Technology, Consumer Index Opt., Cyclical Index Opt., Deutschebank Energy, Eurotop 100 Index, Hong Kong Index, Internet Index, Major Market Index, Min Nasdaq 100, Ms Commodities Index, Nasdaq Biotech Index, Nasdaq 100 Index, Natural Gas Index, Oil Index, Spade Defense Index, The Biotechnology Index, The Broker Dealer Index, The Disk Drive Index, The Japan Index, The Microcap Index, The Morgan Stanley Index, The Pharma Index.
Chicago Board of Trade (Chicago) futures: corn, oats, rough rice, soybeans, soybean oil, soybean meal, wheat, mini-sized corn, mini-sized soybeans, mini-sized wheat, South American soybeans; silver (1,000 ounces, 5,000 ounces), gold (33.2 ounces, 100 ounces); ethanol; U.S. Treasury Bonds, U.S. Treasury notes (10-year, 5-year, 2-year), 30-Day Fed Funds, 10-Year Municipal Note Index, Interest Rate Swaps (10- year, 5-year), mini-sized Eurodollars, Bund, Bobl, Schatz; Dow Jones Industrial Index, mini-sized Dow Jones Industrial Index, Total Market Index, Dow Jones-AIGCI. Options: corn, oats, rough rice, soybeans, soybean oil, soybean meal, wheat; U.S. Treasury bonds, U.S. Treasury notes (10-year, 5-year, 2-year), 30-Day Fed Funds, Flexible U.S. Treasury bonds, Flexible U.S. Treasury notes (10-year, 5-year, 2-year), Interest Rate Swaps (10-year, 5-year); Dow Jones Industrial IndexSM, mini-sized Dow Jones Industrial Index.
Chicago Board Options Exchange (Chicago): equity options, index options, Exchange-Traded Funds (ETFs) options, interest rate options, structured product options, Long-Term Equity AnticiPation Securities (LEAPS), and Flexible Exchange (FLEX) options. CBOE trades options on approximately 1,700 equities, 44 indexes, 54 ETFs, and 4 interest rate products. CBOE introduced options and futures on 12 newly created sector indexes called "PowerPacksSM" in July 2005. The dozen individual sector indexes included in the family of CBOE PowerPacks are banks, biotechnology, gold, Internet, iron and steel, oil, oil services, pharmaceuticals, retail, semiconductor, technology, and telecom indexes. Among the most actively-traded options on indexes at CBOE are S&P 500 Index (SPX); S&P 100 Index (American-Style Exercise, OEX and European-Style Exercise, XEO); S&P Depositary Receipts (SPDRs); Dow Jones Industrial Average (DJX); DIAMONDS Trust, Series 1 (DIA); Nasdaq-100 Index; CBOE Mini-NDX Index (MNX); Nasdaq-100 Index Tracking Stock (QQQ), Russell 2000 Index (RUT), iShares Russell 2000 Index Fund (IWM); Semiconductor HOLDRs Trust (SMH) and iShares Lehman 20+Year Treasury Bond Fund (TLT). Products traded on the CBOE Futures Exchange include futures on: CBOE Volatility Index (VX), CBOE S&P 500 Three Month Variance (VT), CBOE China Index (CX), Mini-Russell 2000 Index (RT), Russell 1000 Index (RN), CBOE DJIAVolatility Index (DV), and CBOE PowerPacksSM Indices.
Chicago Mercantile Exchange (Chicago) foreign currency futures and options: Australian dollar, Brazilian real, British pound, Canadian dollar, Czech Koruna, U.S. dollar index, Euro, E-mini Euro, Hungarian forint, Japanese yen, E-mini Japanese yen, Mexican peso, New Zealand dollar, Norwegian Krone, Polish Zloty, Russian ruble, South African rand, Swedish Krona, Swiss franc. Cross-rate futures and options: Euro FX/Australian dollar, Euro FX/Canadian dollar, Euro FX/Hungarian Forint, Euro FX/Norwegian Krone, Euro FX/Swedish Krona, Australian dollar/Canadian dollar, Canadian dollar/Japanese yen, Australian dollar/Japanese yen, Australian dollar/New Zealand dollar, British pound/Japanese yen, British pound/Swiss franc, Swiss franc/Japanese yen, Euro FX/British pound, Euro FX/Czech Koruna, Euro FX/Japanese yen, Euro FX/Polish Zloty, Euro FX/Swiss franc. Foreign currency-denominated interest rate futures and options: Euroyen, 91-day CETES, 28-day TIIE. Interest rate futures and options: Eurodollar, Eurodollar FRA, 13-week U.S. Treasury bill, 1-month LIBOR (London Interbank Offer Rate), swap futures, turn rate futures, Japanese government bonds, CPI futures, mid-curve options. Stock index futures and options: Standard & Poor's 500, E-Mini S&P 500 Stock Price Index, Standard & Poor's MidCap 400, Nikkei 225 Stock Average, Goldman Sachs Commodity Index, Russell 2000 Stock Price Index, S&P 500/BARRAGrowth Index, S&P 500 BARRAValue Index, NASDAQ 100 Index, E-mini NASDAQ Composite, S&P SmallCap 600, SPCTR Futures, X-Funds, Futures on ETFs E-mini NASDAQ- 100, E-mini S&P 500 MidCap 400, E-mini Russell 1000, E-mini Russell 2000. Alternative investment products: U.S. monthly weather, U.S. seasonal weather, European monthly weather, European seasonal weather, Asia-Pacific monthly weather, Asia-Pacific seasonal weather, ethanol. Agricultural futures and options: live cattle, feeder cattle, lean hogs, frozen pork bellies, milk (Class III & IV), nonfat dry milk, butter, random-length butter, cheese, DAP, UAN, urea.
Kansas City Board of Trade (Kansas City) futures and options: wheat, Value Line Index. Futures: wheat, Value Line Index.
Minneapolis Grain Exchange (Minneapolis) futures and options: hard red spring wheat, Hard Red Winter Wheat Index (HRWI), Hard Red Spring Wheat Index (HRSI), Soft Red Winter Wheat Index (SRWI), National Corn Index (NCI), and National Soybean Index (NSI).
New York Board of Trade agricultural futures and options contracts: cocoa, Coffee "C," Cotton No. 2, ethanol, frozen concentrated orange juice (FCOJ), Sugar No. 11, Sugar No. 14, and pulp. Index and currency marketplace: futures and options on NYSE Composite Index, Reuters/Jefferies CRB Index, Russell 1000, 2000, and 3000 Indexes, the U.S. Dollar Index, and 32 cross-rate currency contracts.
New York Mercantile Exchange (New York) NYMEX Division: futures and options: light, sweet crude oil, New York Harbor unleaded gasoline, heating oil, Henry Hub natural gas, platinum. Futures: palladium. COMEX Division: Futures and options: gold, silver, copper, and aluminum.
Pacific Exchange (San Francisco) Options, LEAPS, and FLEX options on more than 1,800 stocks and ETFs.
Philadelphia Stock Exchange (Philadelphia): currency options: Australian dollar, British pound, Canadian dollar, Euro, Japanese yen, Mexican peso (customized contracts only), Swiss franc, U.S. dollar (customized contracts only); SPDR Options; sector index options: capital markets, insurance, mortgage finance, regional bank, defense, drug, Europe, gold and silver, housing, oil service, semiconductor, utility, media and entertainment, casino gaming, coal producers, footwear and athletic, investment managers, oil exploration and production, semiconductor capital equipment, semiconductor device, specialty retail, steel producers, Internet, bio-clinical trials; FLEX options, LEAPS, HOLDRS; currency futures.

acronym for Standard & Poor's Depositary Receipt, traded on the American Stock Exchange under the ticker symbol "SPY." Called spiders, they are securities that represent ownership in a long-term Unit Investment Trust that holds a portfolio of common stocks designed to track the performance of the S&P 500 index. A SPDR entitles a holder to receive proportionate quarterly cash distributions corresponding to the dividends that accrue to the S&P 500 stocks in the underlying portfolio, less trust expenses. Like a stock, SPDRs can be traded continuously throughout the trading day, or can be held for the long-term. In contrast, S&P 500 index mutual funds are priced only once, at the end of each trading day. Amex also trades MidCap SPDRs, which track the S&P MidCap 400 index.