A. A stock index or stock market index is a method of measuring the value of a section of the stock market.

It is computed from the prices of selected stocks (sometimes a weighted average). It is a tool used by investors and financial managers to describe the market, and to compare the return on specific investments. An index is a mathematical construct, so it may not be invested in directly. But many mutual funds and exchange-traded funds attempt to "track" an index (see index fund), and those funds that do may not be judged against those that do.

Dow Jones Industrial Average The Dow Jones Industrial Average is a price weighted index that represents large and well-known U.S. companies. The index covers all industries with the exception of Transportation and Utilities. While stock selection is not governed by quantitative rules, a stock typically is added only if the company has an excellent reputation, demonstrates sustained growth and is of interest to a large number of investors. According to the Dow Jones website, the index is calculated as follows: The Dow Jones averages are unique in that they are price weighted rather than market capitalization weighted. Their component weightings are therefore affected only by changes in the stocks prices, in contrast with other indexes weightings that are affected by both price changes and changes in the number of shares outstanding. When the averages were initially created, their values were calculated by simply adding up the component stocks prices and dividing by the number of components. Later, the practice of adjusting the divisor was initiated to smooth out the effects of stock splits and other corporate actions. According to this weekends Barrons, the current divisors are: Dow Jones 30 Industrial Average: .12482483 Dow Jones 20 Transportation Average: .20882618 Dow Jones 15 Utilities Average: 1.4646169 Dow Jones 65 Composite Average: .77093357 Theres the S&P 500, the NASDAQ, the Dow Jones. You hear these terms thrown around on the news, and you know that these words are vaguely investing-related. But youre not sure what any of these terms really mean. What's what? Market Index The S&P 500, NASDAQ, Dow Jones, Russell and Wilshire are all examples of a market index. An index provides a summary of the overall market by tracking some of the top stocks within that market. An tries to provide a representative snapshot that shows the direction that the overall market is headed. Indexes dont necessarily track every single stock. Some indexes try to represent small, medium and large companies, while other indexes represent only the largest companies. Some indexes tend to track companies within a certain sector, like technology, while other indices are more broad.

The S&P 500 This index tracks 500 large U.S. companies across a wide span of industries and sectors. The stocks in the S&P 500 represent roughly 70 percent of all the stocks that are publicly traded. S&P stands for Standards and Poors, the name of a market research firm. Companies CAN be listed in more than one index. Some of the largest companies within the S&P 500 are also in the Dow Jones Industrial Average. The Dow Jones Industrial Average Named after Charles Dow, this index tracks the 30 largest U.S. companies. This means it represents large-cap companies, which is the industry term for very big companies like Johnson & Johnson, McDonalds and Coca-Cola. Although the companies within the Dow Jones represent only about 25 percent of all stocks, the DJIA is widely accepted as the leading indicator of market health. The NASDAQ I saved this one for last because it can get a little confusing. Nasdaq refers to both an index and a trading exchange. Let me back up a little and give you some background: Theres a marketplace where people go to buy stocks. This marketplace is called an exchange. The most famous one is the New York Stock Exchange. Theres also a famous one called the Nasdaq Exchange. Stocks that are traded on the Nasdaq Exchange tend to be tech companies, like Apple and Google. Of course, companies on the Nasdaq dont have to be as huge as those two icons. Smaller companies like Angies List (the website that offers peer-to-peer reviews of home-repair contractors) and 1-800-Flowers (the website that delivers flowers) are also listed on the Nasdaq exchange. The Nasdaq also trades some banking companies, airline companies like Spirit Airlines, and even a few non-tech businesses like Starbucks and shoe company Steve Madden. In other words, theres no cast-in-stone law that says only high-tech companies are traded on the Nasdaq Exchange. The Nasdaq just generally tends to hold an abundance of tech companies. The Nasdaq market index, which is known as the Nasdaq Composite, tracks the roughly 3, 000 companies that are traded on the Nasdaq exchange. This is unusual, because no other exchange has its own popular index. The nightly news doesnt read stats from the New York Stock Exchange Composite. The Nasdaq Composite has grown popular because its commonly accepted as a shorthand indicator of how tech-sector and innovative companies both big and small are faring.

Dow Jones Industrial Average (INDU:IND) Members Company Alcoa Inc Walt Disney Co/The JPMorgan Chase & Co Bank of America Corp Johnson & Johnson American Express Co Price 9.26 52.19 45.36 12.11 71.55 59.61 Change +0.19 +0.98 +0.79 +0.14 +0.81 +0.61 % Change +2.09% +1.91% +1.77% +1.17% +1.15% +1.03% Volume 2,722,522 2,048,914 4,679,728 17,606,863 2,338,863 827,783 Time (ET) 20:04:03 20:04:03 20:04:05 20:04:03 20:04:05 20:04:03

Company EI du Pont de Nemours & Co Travelers Cos Inc/The United Technologies Corp 3M Co AT&T Inc Caterpillar Inc Verizon Communications Inc Chevron Corp General Electric Co Exxon Mobil Corp Pfizer Inc Wal-Mart Stores Inc Boeing Co/The Cisco Systems Inc Procter & Gamble Co/The UnitedHealth Group Inc Coca-Cola Co/The Hewlett-Packard Co Home Depot Inc/The International Business Machines Corp Intel Corp McDonald's Corp Merck & Co Inc Microsoft Corp

Price 45.71 74.06 84.98 95.41 35.23 94.92 44.30 110.50 21.20 88.96 25.96 69.06 77.69 20.50 69.09 52.09 37.66 15.14 63.18 193.99 21.16 89.90 41.93 26.78

Change +0.42 +0.64 +0.67 +0.74 +0.20 +0.52 +0.24 +0.58 +0.10 +0.41 +0.11 +0.26 +0.22 +0.05 +0.14 +0.10 +0.06 0.00 -0.15 -1.28 -0.16 -0.75 -0.43 -0.50

% Change +0.93% +0.87% +0.79% +0.78% +0.57% +0.55% +0.54% +0.53% +0.47% +0.46% +0.43% +0.38% +0.28% +0.24% +0.20% +0.19% +0.16% 0.00% -0.24% -0.66% -0.75% -0.83% -1.02% -1.83%

Volume 1,124,853 497,582 979,268 612,860 4,066,358 1,249,460 4,023,948 1,157,584 6,101,967 3,550,444 5,726,477 1,296,748 803,189 8,064,090 1,394,784 2,051,170 5,845,017 3,444,015 1,200,438 806,254 6,443,326 1,765,722 3,356,449 11,811,201

Time (ET) 20:04:03 20:04:04 20:04:05 20:04:03 20:04:03 20:04:05 20:04:03 20:04:05 20:04:04 20:04:04 20:04:03 20:04:04 20:04:03 20:10:00 20:04:03 20:04:05 20:04:03 20:04:03 20:04:05 20:04:03 20:10:00 20:04:04 20:04:03 20:10:00

NASDAQ Companies Name Symbol Market Cap Country IPO Year Subsector

1-800 FLOWERS.COM,

FLWS

$240.74M

United

1999

Other Specialty Stores

Inc.

States

FLWS Stock Quote |

FLWS Ratings

FLWS Stock Report

1st Century Bancshares, Inc

FCTY

$42.4M

United States

n/a

Major Banks

FCTY Stock Quote |

FCTY Ratings

FCTY Stock Report

1st Constitution Bancorp (NJ)

FCCY

$51.16M

United States

n/a

Savings Institutions

FCCY Stock Quote |

FCCY Ratings

FCCY Stock Report

1st Source Corporation

SRCE

$552.84M

United States

n/a

Major Banks

SRCE Stock Quote |

SRCE Ratings

SRCE Stock Report

1st United Bancorp, Inc. (FL)

FUBC

$216.01M

United States

n/a

Major Banks

FUBC Stock Quote |

FUBC Ratings

FUBC Stock Report

21Vianet Group, Inc.

VNET

$352.1M

China

n/a

Computer Software: Programming, Data Processing

VNET Stock Quote |

VNET Ratings

VNET Stock Report

3SBio Inc.

SSRX

$268.48M

China

2007

Major Pharmaceuticals

SSRX Stock Quote |

SSRX Ratings

SSRX Stock Report

51job, Inc.

JOBS

$576.18M

China

2004

Diversified Commercial

Services

JOBS Stock Quote |

JOBS Ratings

JOBS Stock Report

8x8 Inc

EGHT

$535.31M

United States

n/a

Telecommunications Equipment

EGHT Stock Quote |

EGHT Ratings

EGHT Stock Report

A V Homes, Inc.

AVHI

$195.18M

United States

n/a

Homebuilding

AVHI Stock Quote |

AVHI Ratings

AVHI Stock Report

A. Schulman, Inc.

SHLM

$888.31M

United States

1972

Major Chemicals

SHLM Stock Quote |

SHLM Ratings

SHLM Stock Report

AAON, Inc.

AAON

$533.43M

United States

n/a

Industrial Machinery/Components

AAON Stock Quote |

AAON Ratings

AAON Stock Report

Aastrom Biosciences, Inc.

ASTM

$61.73M

United States

1997

Biotechnology: Biological Products (No Diagnostic Substances)

ASTM Stock Quote |

ASTM Ratings

ASTM Stock Report

ABAXIS, Inc.

ABAX

$826.64M

United States

1992

Industrial Machinery/Components

ABAX Stock Quote |

ABAX Ratings

ABAX Stock Report

ABIOMED, Inc.

ABMD

$531.98M

United States

n/a

Medical/Dental Instruments

ABMD Stock Quote |

ABMD Ratings

ABMD Stock Report

Abraxas Petroleum Corporation

AXAS

$208.25M

United States

n/a

Oil & Gas Production

AXAS Stock Quote |

AXAS Ratings

AXAS Stock Report

Acacia Research Corporation

ACTG

$1.32B

United States

n/a

Multi-Sector Companies

ACTG Stock Quote |

ACTG Ratings

ACTG Stock Report

Acadia Healthcare Company, Inc.

ACHC

$1.18B

United States

n/a

Medical Specialities

ACHC Stock Quote |

ACHC Ratings

ACHC Stock Report

ACADIA Pharmaceuticals Inc.

ACAD

$391.82M

United States

1985

Major Pharmaceuticals

ACAD Stock Quote |

ACAD Ratings

ACAD Stock Report

Accelerate Diagnostics, Inc.

AXDX

$103.44M

United States

n/a

n/a

AXDX Stock Quote |

AXDX Ratings

AXDX Stock Report

Accelrys, Inc.

ACCL

$512.98M

United States

1995

Computer Software: Prepackaged Software

ACCL Stock Quote |

ACCL Ratings

ACCL Stock Report

Access National Corporation

ANCX

$147.69M

United States

n/a

Savings Institutions

ANCX Stock Quote |

ANCX Ratings

ANCX Stock Report

Accuray Incorporated

ARAY

$390.9M

United States

2007

Medical/Dental Instruments

ARAY Stock Quote |

ARAY Ratings

ARAY Stock Report

AcelRx Pharmaceuticals, Inc.

ACRX

$171.94M

United States

n/a

Major Pharmaceuticals

ACRX Stock Quote |

ACRX Ratings

ACRX Stock Report

Aceto Corporation

ACET

$281.09M

United States

n/a

Specialty Chemicals

ACET Stock Quote |

ACET Ratings

ACET Stock Report

Achillion Pharmaceuticals, Inc.

ACHN

$751.43M

United States

2006

Major Pharmaceuticals

S&P 500 Component Stocks

Ticker symbol

Company

SEC filings

GICS Sector

Address of Headquarters

Date first added

GT

Goodyear Tire & Rubber

reports

Consumer Discretionary

Akron, Ohio

Ticker symbol

Company

SEC filings

GICS Sector

Address of Headquarters

Date first added

FE

FirstEnergy Corp

reports

Utilities

Akron, Ohio

PRGO

Perrigo

reports

Health Care

Allegan, Michigan

2011-12-16

APD

Air Products & Chemicals Inc

reports

Materials

Allentown, Pennsylvania

PPL

PPL Corp.

reports

Utilities

Allentown, Pennsylvania

AES

AES Corp

reports

Utilities

Arlington, Virginia

AVB

AvalonBay Communities, Inc.

reports

Financials

Arlington, Virginia
[1]

IBM

International Bus. Machines

reports

Information Technology

Armonk, New York

GPC

Genuine Parts

reports

Consumer Discretionary

Atlanta, Georgia

CCE

Coca-Cola Enterprises

reports

Consumer Staples

Atlanta, Georgia

KO

The Coca Cola Company

reports

Consumer Staples

Atlanta, Georgia

Ticker symbol

Company

SEC filings

GICS Sector

Address of Headquarters

Date first added

EFX

Equifax Inc.

reports

Financials

Atlanta, Georgia

ICE

IntercontinentalExchange Inc.

reports

Financials

Atlanta, Georgia

IVZ

Invesco Ltd.

reports

Financials

Atlanta, Georgia

STI

SunTrust Banks

reports

Financials

Atlanta, Georgia

UPS

United Parcel Service

reports

Industrials

Atlanta, Georgia

GAS

AGL Resources Inc.

reports

Utilities

Atlanta, Georgia

SO

Southern Co.

reports

Utilities

Atlanta, Georgia

BWA

BorgWarner

reports

Consumer Discretionary

Auburn Hills, Michigan

2011-12-16

HRL

Hormel Foods Corp.

reports

Consumer Staples

Austin, Minnesota

WFM

Whole Foods Market

reports

Consumer Staples

Austin, Texas

LM

Legg Mason

reports

Financials

Baltimore, Maryland

Ticker symbol

Company

SEC filings

GICS Sector

Address of Headquarters

Date first added

TROW

T. Rowe Price Group

reports

Financials

Baltimore, Maryland

Kellogg Co.

reports

Consumer Staples

Battle Creek, Michigan

EXPE

Expedia Inc.

reports

Consumer Discretionary

Bellevue, Washington

PCAR

PACCAR Inc.

reports

Industrials

Bellevue, Washington

WHR

Whirlpool Corp.

reports

Consumer Discretionary

Benton Harbor, Michigan

WMT

Wal-Mart Stores

reports

Consumer Staples

Bentonville, Arkansas

NU

Northeast Utilities

reports

Utilities

Berlin, Connecticut

MAR

Marriott Int'l.

reports

Consumer Discretionary

Bethesda, Maryland

HST

Host Hotels & Resorts

reports

Financials

Bethesda, Maryland

CVH

Coventry Health Care Inc. reports

Health Care

Bethesda,

Ticker symbol

Company

SEC filings

GICS Sector

Address of Headquarters

Date first added

Maryland

LMT

Lockheed Martin Corp.

reports

Industrials

Bethesda, Maryland

CVC

Cablevision Systems Corp. reports

Consumer Discretionary

Bethpage, New York

RF

Regions Financial Corp.

reports

Financials

Birmingham, Alabama

VMC

Vulcan Materials

reports

Materials

Birmingham, Alabama

PHM

Pulte Homes Inc.

reports

Consumer Discretionary

Bloomfield Hills, Michigan

ADT

ADT Corp

reports

Industrials

Boca Raton, Florida

2012-10-01

MU

Micron Technology

reports

Information Technology

Boise, Idaho

AMT

American Tower Corp A

reports

Financials

Boston, Massachusetts

BXP

Boston Properties

reports

Financials

Boston, Massachusetts

Ticker symbol

Company

SEC filings

GICS Sector

Address of Headquarters

Date first added

STT

State Street Corp.

reports

Financials

Boston, Massachusetts

IRM

Iron Mountain Incorporated

reports

Industrials

Boston, Massachusetts

PBCT

People's United Bank

reports

Financials

Bridgeport, Connecticut

FISV

Fiserv Inc

reports

Information Technology

Brookfield, Wisconsin

BLL

Ball Corp

reports

Materials

Broomfield, Colorado

MTB

M&T Bank Corp.

reports

Financials

Buffalo, New York

DIS B.

The Walt Disney Company reports

Consumer Discretionary

Burbank, California

Trading in a margin account is like the proverbial two-edged sword it can cut both ways.

Margin accounts allow you to borrow money to buy stock, which is a great deal if the stock goes up, but can be a disaster if the stock heads south. Margin trading uses the power of borrowed money to magnify how much you can buy in your account. Your broker lends you the money because they want your trading business.

How to Set Up a Margin Account To use margin you must set up a margin account, which is different from a regular trading account at a broker. Most brokers will check your credit and ask about your level of investment knowledge before opening a margin account. Margin accounts require an initial deposit, which can range from $2,000 to $5,000 and up depending on the broker. This initial deposit also called theminimum margin sets your starting point for trading. If you deposited $2,000, you would have $4,000 of buying power (your $2,000, plus $2,000 from the broker). You can margin up to 50% of a stocks price in most cases. For example, if you wanted to buy 100 shares of a stock selling for $20 per share for a total of $2,000, you could margin $1,000 of the purchase price. In other words, you would use $1,000 of your money, known as the initial margin, and the broker would loan you $1,000. Lower Limits You dont have to borrow up to 50%, but that is as high as you can go. Some stocks may have lower limits and some brokers might not let you margin up to 50%.

You now own 200 shares worth $2,000, but have only invested $1,000 of your money in the deal. If the stock goes up to $25 per share, your holding is now worth $2,500, - a nice return on $1,000 invested. If you sell and repay the broker, you are left with a $500 profit (ignoring fees and interest for the sake of illustration), which gives you a 50% return. In a regular cash account, you would have invested $2,000 of your own money to earn $500 a 25% return. Margin Call However, if the stock goes down to $5 per share, your holding is now only worth $500 and you still owe your broker $1,000, plus interest. Expect a phone call from your broker soon. The call will come because you have to maintain a minimum account balance or maintenance margin as part of your agreement with the broker. The maintenance margin says you must keep your account balance above a certain level. If the account balance falls below that level, which might be from 30% to 40% of the original balance, the broker will issue a margin call. The margin call requires you bring the account back up to the maintenance level. You can do that by depositing more money in the account or by selling the stock. In extreme circumstances, the broker may sell the stock out of your account without consulting you.

Conditions and Restrictions Margin trading has some other restrictions and conditions:

Your broker will charge you interest on the money you borrow, so only use margin for shortterm trading positions. If you hold a margined stock for a lengthy period, the interest charged by the broker may eat up all or most of any potential gain.

Not all stocks are eligible for margin trading. You can buy penny stocks, OTC stocks, IPOs and others on margin. Check with your broker for more complete information. When you sell stocks bought on margin the money goes into the margin account to settle the loan to the broker. Any excess is available for withdrawal.

Not all margin accounts and agreements are the same. Read the complete agreement and make sure you understand it before signing up with a broker. Margin trading is not for beginners. It is one of the few ways you can lose more than you invested if things go bad, since you must repay borrowed money. Conclusion For knowledgeable, short-term traders, margin provides a way to magnify your trading power. However, it is a risky business best left to experienced investor because missteps can be extremely costly.