Question

briefly explain with example what is indexing?

Answer 1

Indexing is creating a single number that is used to measure multiple quantities (or a change in them over time or space). One example of indexing is creation of a stock market index, which is composed of, say, the prices of top 500 stocks listed on the US exchange. Using a weight for each stock (total of such weights would be 100), we arrive at a weighted average (or index) and as the prices of the different stocks (of these 500) move over time (some in opposite directions, and most of them in different proportional increemnts) we arrive at an average increase or decrease by recalculating teh index for the new set of prices, and compare its value with teh original value of the index.