Personal Finance

How to Calculate Return on Indices in a Stock Market

Note: This formula is useful for determining the return of individual investments as well.

An example

Let's say that you want to calculate the return of the S&P 500 index during the month of October 2015.

First, using an accurate price chart, determine the starting and ending price. In this case, on October 1, the S&P 500 opened at 1,919.65 and on October 30, the index closed at 2,079.36.

Using the formula mentioned above, we can see that:

A positive percentage indicates that the index increased during the time period, while a negative percentage indicates that the index fell. So, during October 2015, the S&P 500 increased in value by 8.3%.

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