What is the bond market index?

As investors of shares, investors holding bonds, watching the bond indexes to collect bond market information. The bond market index gives a number that calculates a set of bonds using prices. By monitoring the movements of these numbers from day to day, investors can get an idea of ​​the market movement as a whole.

The index is a list of assets that are weighed according to a certain factor. Assets are often weighed according to the market share they represent. The Index reporting agency calculates the number using the prices of these assets. The number in itself makes no sense, because its size depends on the decisions to the agency that reports how to calculate it. Investors pay attention to movements in the index as a percentage of the total number.

The bond market index draws its data exclusively from bonds. A bond is a debt tool while Stocs are capital tools. Purchase of shares gives the investor partial ownership of future profits of the company. The purchase of a bond basically lends the company the purchase price of the bond in exchange for future payments. In the secondary bond market, investors sell these loans to each other. Like most loans, bonds have maturity and planned installments.

Some of the entities that have reliable and known stock indexes also have bond indexes. Standard & Poor's National Index of Municipal Bonds Without AMT is reported by the same entity that generates the S&P 500 on the stock market. Dow Jones also reports several bond markets.

Binding indices can have different features based on bonds that include the index list. For example, some focus on government bonds. Funds that use access to building their portfolios can establish their shares of widely recognized indexes or invent their own. If the fund creates its own bond market index, it is often designedUsing improved indexing techniques.

Other financial tools can be based on bond market index. For example, index funds draw their value directly from the power of the base index. In contracts such as rental, payments can be associated with the index using a built -in derivative. Derivatives are usually based on robust indicators that are accepted as reliable indicators of bond market movement.