13
QuizMultiple Choice

Investing and Financial Markets

Question 13 • Personal Finance - EL3403

Which best describes what a market index does?

Answer
A
An index measures market performance.
B
An index measures economic trends.
C
An index measures growth.
D
An index measures the performance of a single stock.

Explanation

A market index tracks the combined performance of a selected group of stocks or other investments, giving a snapshot of how that part of the market is doing. Therefore, the best choice is “An index measures market performance.” A single stock’s performance is measured individually, not by a market index.

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