| In the financial markets, an index is a way of measuring changes in the prices of a basket of stocks, and represents the changes using a single figure. The purpose is to give investors an easy way to see the general direction of stocks in the index. The FTSE 100, for example, is calculated by taking a weighted average of the share prices of the largest 100 companies on the London Stock Exchange. Launched in 1984 with a base figure of 1,000, the FTSE is calculated continuously throughout the trading day. The phrase, FTSE climbed 37 points today gives an immediate idea of the direction of the market without indicating what happened to individual stocks. Index funds track the companies in a particular index.
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