Investing in Stocks
How are stock indices constructed?
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A stock index is an indicator that combines the price movements of many stocks to show the price level of the stock market as a whole.
There are price-weighted indices, which simply average stock prices, and market-capitalization-weighted indices, which weight prices by the number of listed shares and compare market capitalization at a base date with the present. Most major indices worldwide, such as the KOSPI, KOSDAQ and S&P500, are calculated using market-capitalization weighting.
This answer is general financial information as of 2026-10-14, not investment advice. Rules and tax rates change, so please also check the latest guidance from the source institution.
