Definition of index

1. In general. A numerical figure adjusted periodically to reflect changes in the quantity of goods produced, prices paid, loan interest rates, by comparing current activity to a base year, previous month, or previous year. The Consumer Price Index, measuring changes in prices paid for consumer goods, is a widely used example.
2. Banking. The interest rate used as the base rate in pricing variable rate loans, often called a Cost Of Funds Index. In an adjustable-rate mortgage, the borrower's loan rate is reset periodically at a margin above the index rate. Numerous index rates are used in bank lending, for example, the Federal Home Loan Bank Board's cost of funds index or the National Average Mortgage Contract Rate Index.
3. Economics. A statistical measure of the rate of change in the economy, for example, the index of leading economic indicators, which tends to anticipate changes in the business cycle.
4. Securities. An indicator of financial market performance, for example, the Standard & Poor's 500 Index of industrial stocks, or the Dow Jones Industrial Average.

statistical compilation that puts in context a current economic or financial condition, especially by relating it to a base year, the previous year, the previous month, etc. Indexes are often used to make adjustments in wage rates, rental rates, loan interest rates, and pension benefits set by long-term contracts. A widely used index is the Consumer Price Index (CPI).

1. an alphabetical listing of important words and concepts found in a book and the pages on which these terms may be found. Many page layout and word processing programs have the ability to automatically generate indexes from properly tagged terms (see desktop publishing; tags). Note that the process is not wholly automatic; the human still has to specify which words should be indexed.
2. a pictograph of a pointing hand. Sometimes called a fist.
3. the number that picks out an element of an array. For example, in A[2], 2 is the index. See array.

statistical composite that measures changes in the economy or in financial markets, often expressed in percentage changes from a base period or from the previous month. For instance, the Consumer Price Index uses 1982-84 as the base period. That index, made up of the prices for key consumer goods and services, moves up and down as the rate of inflation changes. By the late '90s the index climbed from 100 in 1982-84 to 160 and higher, meaning that the basket of goods the index was based on rose in price by more than 60%.

Indices also measure the ups and downs of stock, bond, and commodities markets, reflecting market prices and the number of shares outstanding for the companies in the index. Some well-known indices are the Dow Jones Averages, the New York Stock Exchange Composite Index, the American Stock Exchange Composite Index, the Standard & Poor's 500 Index, the NASDAQ Composite Index, the Russell 2000 Index and the Value Line Composite Index. Subindices for industry groups such as drugs, railroads, or computers are also tracked. Stock market indices form the basis for trading in index options.

1. a statistic that indicates some current economic or financial condition. Indexes are often used to make adjustments in wage rates, rental rates, loan interest rates, and pension benefits set by longtermcontracts.
   Example: Office building rental rates are sometimes adjusted in relation to the consumer price index.

2. to adjust contract terms according to an index. See indexed loan.
   Example: Mortgage interest rates on Adjustable-Rate Mortgages are often indexed to the average mortgage rate for all lenders or the average cost of funds for all lenders.