Canadian Securities Course (CSC) Level 1 Practice Exam

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

Indexes represent individual stocks
Averages represent a broad market segment
Indices track group performance, averages measure individual stock prices
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.