Canadian Securities Course (CSC) Level 1 Practice Exam

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Describe the difference between a stock index and a stock average.

  1. Indexes represent individual stocks

  2. Averages represent a broad market segment

  3. Indices track group performance, averages measure individual stock prices

  4. Stock averages represent overall market performance

The correct answer is: Indices track group performance, averages measure individual stock prices

A stock index and a stock average differ in how they track and measure market performance. While a stock index tracks the collective performance of a group of stocks, representing the overall movement of the market or a specific segment, a stock average calculates the average price of a selected group of individual stocks. Therefore, the correct answer is C: Indices track group performance, averages measure individual stock prices. This choice accurately captures the distinction between a stock index and a stock average.

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