What Is The S & P 500?

Question

I don't understand all that stock, and trading stuff:-( I am studying for my Securities License and it is really hard for me to understand all this Wall Street stuff. My background is in Social Work. I am embracing a career change in the financial services industry. 10 points for best answer. Thanks.

Answer 1

The S&P 500 is also known as the Standard & Poor's 500 Stock Index. It is a number that measures how well the U.S. Stock (Equity) Market is performing. This gives an indication of the condition of the U.S. ecomony as well.

There are 500 of the largest companies representing a wide range of industries that are included in the S&P 500 Index. In order to ensure that this index truly represents the state of the U.S. economy, an S&P Index Committee follows specific rules to add and delete companies to the index list as necessary. But the total always remains at 500.

This S&P 500 index is computed using the weighted average market capitalization method. To compute the market capitalization for each company, take the number of outstanding shares (stock that has been sold to investors) of each company and multiply that number by the company's current share price, or market value. The larger the market weight of a company, the more impact that company will have on the index.

Answer 2

500 stocks have been selected by Standard & Poors Corporation as "important American stocks." The 500 stocks make up the S& P 500. If you average all their prices and watch the average from day to day and year to year, you can see which way the market is headed.

Answer 3

standard and poor is the most common 500 traded stocks on the nyse. and when investing if you avg better then S&P you are doing great.