A stock exchange provides services to bring together stock brokers, traders, buyers and sellers to trade in shares, bonds and other securities. A requirement of trading on a certain stock exchange is that the company must be listed there. In order to offer company shares to the large public, a company must first of all be floated on the stock market usually through a so called initial public offering process. NYSE Euronext US was the largest stock exchange operator in 2016, with market capitalization of listed companies amounting to approximately 19.22 trillion U.S. dollars.
The stock market is fluid, ever-changing and unpredictable. Investors and financial managers often turn to stock market indices as a tool to aid them in measuring the value of a section of the stock market. There are different indices that help them to do so. A capitalization-weighted index, for example, is a measurement of the market value of outstanding shares of components, where larger components carry a weighting relative to their size. The price-weighted index, such as the Dow Jones Index, is different in this sense. It involves combining the price of each component of the index and dividing the value by the total number of stocks so that each component part makes up a fraction of the index proportional to its price. Other most important stock indices globally are S&P 500, DAX, Nikkei 225 and FTSE 100.
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