When a stock index rises, it means that:
A) all stocks on the index have risen in value.
B) the weighted average of all stock prices in the index has risen.
C) all stocks on that index are equally weighteC.
D) All of the answers are correct.

Question

Quizplus · Accepted Answer

A stock index represents the weighted average of prices of a group of selected stocks. Therefore, when the stock index rises, it means that the weighted average of all stock prices in the index has risen, which can be due to a rise in certain stocks or a rise in all stocks. Option A is incorrect because it is not necessary that all stocks on the index have risen in value. Option C is incorrect because stocks on the index can have different weights based on their market capitalization or other factors. Option D is incorrect because not all answers are correct, only option B is correct.

When a Stock Index Rises, It Means That