Definition - What does Index mean?

The term index can be defined as an interest rate, which is market-sensitive and that is used to determine changes in interest rate on mortgages and other loans with variable rate of interest. Some of the common indices are LIBOR (London Interbank Offered Rate) and The Wall Street’s Journal listed prime rate.

Justipedia explains Index

Statistical indexes are used to find out changes in economy and keeping track of them. The Consumer Price Index is a prime of example of such indexes. It is also used to determine movement or changes in the stock market. All these indexes, for comparison purpose are based on month, year or other periods.

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