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A look at the TSE 300 composite index.

If you've ever read or listened to news reports on the stock market, you've heard about the Toronto Stock Exchange (TSE) 300 Composite Index.

"The TSE 300 Composite Index rose 15 points today to close at 3560', or 'The stock market fell this week, with the TSE 300 down 8 points to 3485."

Although the Index numbers in these reports may sound complex and confusing, the idea behind the Index is very simple. A market Index is a way of measuring the performance and direction of stock market prices in general.

For example, if the TSE 300 Composite Index rises, stock prices on the TSE are generally increasing. Similarly, a drop in the Index signals an overall decline in stock prices. Of course, a rise in the TSE 300 Index doesn't mean every stock in the market has increased in price. But is does signal that, on average, stock prices have moved up.

The TSE 300 Composite Index consists of 300 of the top Canadian stocks, accounting for more than three-quarters of the value of Canadian stock trading. That means the movements of the Index generally reflect the movement of the Canadian stock market as a whole.

Investors can use Index information in many ways. At its simplest, the Index shows how the market performed on one day. As well, some analysts look at historical patterns of the Index in order to determine where the market is headed.

You can also use the Index to measure the success of your stock investing strategy. For example, investors sometimes compare the annual returns on the stocks in their portfolio with the yearly performance of the TSE 300 Index, which represents the performance of the market in general.

If you are interested in comparing the total returns on your investments with those for the Index, you can use the TSE 300 Total Return Index. Whereas the basic TSE 300 Composite measures just the increase in stock prices, the Total Return Index includes both stock price increases and the dividends earned on the stocks in the Index.

Another useful feature of the TSE Composite Index is its 'composite' nature. The TSE 300 Index is divided into 14 groups representing major industries, and is further broken down into 43 sub-groups of specific industry sectors. The TSE tracks the performance of these specific sectors so that investors can compare the market performance of different industries.
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Title Annotation:Toronto Stock Exchange
Publication:Manitoba Business
Date:Nov 1, 1992
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