Market Average
What It Is:
A market average is the general level of prices in a stock market as expressed by a basket of frequently traded stocks.
How It Works/Example:
A market average, best exemplified by the Dow Jones Industrial Average (DJIA) and the S&P 500 Index, is based on a basket of stocks, not all the stocks that trade on any given day.
Market averages can be price-weighted or market-weighted, depending on the methodology specified by the company that publishes the particular market average.
Why It Matters:
The prices of stocks in a given market vary in terms of industry and frequency of trading, and it is not practical to account for every registered stock. A market average provides an overview of market activity that speaks to investor perceptions and economic productivity.
YOY is short for year over year, which refers to the mathematical process of comparing one year of data to the previous year of data. In business, note that a fiscal year does not always go from January 1 to December 31; many companies have fiscal years beginning at other times.
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Cached on May 25, 2013, 2:20 pm