Index number

Definition:

A way to standardize the price changes of goods that have much different prices. For example, a consumer price index might be represented by a shopping cart of goods. Suppose those goods cost $324. The index would begin by dividing by 3.24 and the initial value would be 100. One usually watches the percentage increases or decreases in the index. See: Consumer Price Index (CPI), Time series models

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Copyright © 2011 Campbell R. Harvey, Professor of Finance, Fuqua School of Business at Duke University

Term of the Day

Qualitative research

Traditional analysis of firm-specific prospects for future earnings. It may be based on data collected by the analysts, there is no formal quantitative framework used to generate projections.

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