Chief executive officer
The chief executive officer or just chief executive, is the most senior corporate, executive, or administrative officer in charge of managing an organization – an independent legal entity such as a company or nonprofit institution. CEOs lead a range of organizations, including public and private corporations, non-profit organizations and some government organizations; the CEO of a corporation or company reports to the board of directors and is charged with maximizing the value of the entity, which may include maximizing the share price, market share, revenues or another element. In the non-profit and government sector, CEOs aim at achieving outcomes related to the organization's mission, such as reducing poverty, increasing literacy, etc. In the early 21st century, top executives had technical degrees in science, engineering or law; the responsibility of an organization's CEO are set by the organization's board of directors or other authority, depending on the organization's legal structure.
They can be far-reaching or quite limited and are enshrined in a formal delegation of authority. Responsibilities include being a decision maker on strategy and other key policy issues, leader and executor; the communicator role can involve speaking to the press and the rest of the outside world, as well as to the organization's management and employees. As a leader of the company, the CEO or MD advises the board of directors, motivates employees, drives change within the organization; as a manager, the CEO/MD presides over the organization's day-to-day operations. The term refers to the person who makes all the key decisions regarding the company, which includes all sectors and fields of the business, including operations, business development, human resources, etc; the CEO of a company is not the owner of the company. In some countries, there is a dual board system with two separate boards, one executive board for the day-to-day business and one supervisory board for control purposes. In these countries, the CEO presides over the executive board and the chairman presides over the supervisory board, these two roles will always be held by different people.
This ensures a distinction between management by the executive board and governance by the supervisory board. This allows for clear lines of authority; the aim is to prevent a conflict of interest and too much power being concentrated in the hands of one person. In the United States, the board of directors is equivalent to the supervisory board, while the executive board may be known as the executive committee. In the United States, in business, the executive officers are the top officers of a corporation, the chief executive officer being the best-known type; the definition varies. In the case of a sole proprietorship, an executive officer is the sole proprietor. In the case of a partnership, an executive officer is a managing partner, senior partner, or administrative partner. In the case of a limited liability company, executive officer is any manager, or officer. A CEO has several subordinate executives, each of whom has specific functional responsibilities referred to as senior executives, executive officers or corporate officers.
Subordinate executives are given different titles in different organizations, but one common category of subordinate executive, if the CEO is the president, is the vice-president. An organization may have more than one vice-president, each tasked with a different area of responsibility; some organizations have subordinate executive officers who have the word chief in their job title, such as chief operating officer, chief financial officer and chief technology officer. The public relations-focused position of chief reputation officer is sometimes included as one such subordinate executive officer, but, as suggested by Anthony Johndrow, CEO of Reputation Economy Advisors, it can be seen as "simply another way to add emphasis to the role of a modern-day CEO – where they are both the external face of, the driving force behind, an organisation culture". In the US, the term chief executive officer is used in business, whereas the term executive director is used in the not-for-profit sector; these terms are mutually exclusive and refer to distinct legal duties and responsibilities.
Implicit in the use of these titles, is that the public not be misled and the general standard regarding their use be applied. In the UK, chief executive and chief executive officer are used in both business and the charitable sector; as of 2013, the use of the term director for senior charity staff is deprecated to avoid confusion with the legal duties and responsibilities associated with being a charity director or trustee, which are non-executive roles. In the United Kingdom, the term director is used instead of chief officer". Business publicists since the days of Edward Bernays and his client John D. Rockefeller and more the corporate publicists for Henry Ford, promoted the concept of the "celebrity CEO". Business journalists have adopted this approach, which assumes that the corporate achievements in the arena of manufacturing, wer
Botswana Telecommunications Corporation
Botswana Telecommunications Corporations is a telecommunications and Internet service provider in Botswana, is headquartered in Gaborone. It provides telecommunications services throughout the country; the company was formally a government entity but is now a public entity listed on the Botswana Stock Exchange as Botswana Telecommunications Limited BTC was established in 1980 to provide, develop and manage Botswana's national and international telecommunications services. BTC is a parastatal. BTC was the only telecommunications provider in Botswana until 1996 when an amendment of the BTC Act removed the monopoly of BTC and allowed indirect competition from two cellular companies, MASCOM and Orange BotswanaBTC's network is composed of an all-digital microwave and fibre optic system with digital exchanges at the main centres; the current network comprises 7,300 kilometers of microwave radio and fibre optic links between 12 main processors, each serving a specific area of the country. The switching units have a capacity of about 117 000 lines.
Current services provided include national and international telephony and data networks small aperture terminal, private wires, leased circuits, toll free services, paging, public telephones, voice messaging, packet switching and customer premises. BTC works with the two mobile operators - Mascom Wireless and Orange. In 2008 BTC established a mobile arm, beMOBILE. On 1 November 2012 BTC was converted to and registered as a public company, Botswana Telecommunications Corporation Limited. BTCL provides virtual telephony services and data communication for corporate networks. Current members of the board of directors of BTCL are: Lorato Boakgomo -Ntakhwana - Chairman of the Board Anthony Masunga -Managing Director Gerald Nthebolan - Member Serty Leburu - Member Alan Boshwaen - Member Choice Pitso - Member Professor Rejoice Tsheko - Member Maclean LetshwitiBTCL Senior Corporate Officers: Anthony Masunga - Managing Director Mmamotse Monageng General Shared Services and Human Resources Abel Bogatsu - General Manager Finance Kaelo Radira - Company Secretary Bambino Masoko - General Manager Sales Pilot Yane - General Manager Marketing Goitseone Tshiamiso - General Manager Customer Care Christopher M. Diswai - General Manager Strategy Thabo Nkala - General Manager Technology Mokgethi Nyatseng - General Manager Wholesale Same Kgosiemang- General Manager Internal Audit For many years, BTC has been Botswana's largest supplier of fixed-line and associated communications services, it has been providing telephony and other products to urban and rural centres across the country.
The following main products and services are offered by BTC: Residential Payphones, Prepaid cards, BTC prepaid, BTC ADSL of up to speeds of 50 Mbps. Business Internet, Frame Relay, ADSL, Internet Products, Data Services and Leased Lines, ISDNCustomer Premises Equipment Telephone Instruments, PABXValue Added Services Abbreviated Dialling, Alarm Call, Caller ID, Call Barring, Call Diversion, Call Waiting, Conference Call, Time announcement, Toll Free, Voice Mail, Itemised BillingTariffs Installation and Rental, Operator Assisted, Toll Free, International pre-paid and postpaid, Public Phones and Scratch'n Dial, Service Call, International Payphones, ISDB BRI Botswana telecommunications corporation has embarked in a network transformation projects in its quest to Improve service quality and provision of superior customer experience. BTC offers high speed and uncapped Broadband Internet connection of up to 50 Mbps; this is made possible through various technologies within the BTC network. BTC innovative solutions enables a "live connected" lifestyle for its customers.
In June 2016 BTCL published its first annual financial statements as a public company for the financial year end 31 March 2016. The company reported a loss of P371 million, due to an impairment write down of P522 million, had revenue of P1.512 billion, a marginal increase from previous year. Total assets were at P1.949 billion while cash equivalents was at P390 million. The company declared a dividend of 5 thebe per shareSubsequent to these results the share price started its decline from its high of P1.30 to P0.85 per share on 15 September 2016. On 2 February 2010 Powertel Communications signed a Cross-Border Interconnection Agreement with Botswana Telecommunications Corporation. BTC agreed to provide Powertel with international bandwidth capacity for two years after the two organisations completed cross border fibre optic connections at Ramokgwebana in December 2009. BTC is providing 45Mbit/s to Zambia. BTC has committed to contribute P504 million to secure reliable bandwidth connection from an undersea fibre optic through the West African Cable System.
BTC and Telecom Namibia both contribute as second tiers while regional giants like Vodacom, MTN, Neotel and Zain will contribute US$100 million each for the development of the undersea cable that will link London with Africa. BTC is committed US$210 million into the Eastern Africa Submarine Cable System to further increase Botswana's bandwidth capacity. In June 2010, the government of Botswana government planned to privatize BTC; the Sunday Standard reported that Presidential Affairs Minister, Lesego Motsumi told parliament that the cabinet has taken a decision regarding the privatization structure of BTC and the information will be communicated with all stakeholders soon. Lesego Motsumi stated that the aim of the privatization was to minimize risks, get maximum benefits, she added that the government had to carry out extensive consultations before going ahe
Finance is a field, concerned with the allocation of assets and liabilities over space and time under conditions of risk or uncertainty. Finance can be defined as the art of money management. Participants in the market aim to price assets based on their risk level, fundamental value, their expected rate of return. Finance can be split into three sub-categories: public finance, corporate finance and personal finance. Matters in personal finance revolve around: Protection against unforeseen personal events, as well as events in the wider economies Transference of family wealth across generations Effects of tax policies management of personal finances Effects of credit on individual financial standing Development of a savings plan or financing for large purchases Planning a secure financial future in an environment of economic instability Pursuing a checking and/or a savings account Personal finance may involve paying for education, financing durable goods such as real estate and cars, buying insurance, e.g. health and property insurance and saving for retirement.
Personal finance may involve paying for a loan, or debt obligations. The six key areas of personal financial planning, as suggested by the Financial Planning Standards Board, are: Financial position: is concerned with understanding the personal resources available by examining net worth and household cash flows. Net worth is a person's balance sheet, calculated by adding up all assets under that person's control, minus all liabilities of the household, at one point in time. Household cash flows total up all from the expected sources of income within a year, minus all expected expenses within the same year. From this analysis, the financial planner can determine to what degree and in what time the personal goals can be accomplished. Adequate protection: the analysis of how to protect a household from unforeseen risks; these risks can be divided into the following: liability, death, disability and long term care. Some of these risks may be self-insurable, while most will require the purchase of an insurance contract.
Determining how much insurance to get, at the most cost effective terms requires knowledge of the market for personal insurance. Business owners, professionals and entertainers require specialized insurance professionals to adequately protect themselves. Since insurance enjoys some tax benefits, utilizing insurance investment products may be a critical piece of the overall investment planning. Tax planning: the income tax is the single largest expense in a household. Managing taxes is not a question of if you will pay taxes, but when and how much. Government gives many incentives in the form of tax deductions and credits, which can be used to reduce the lifetime tax burden. Most modern governments use a progressive tax; as one's income grows, a higher marginal rate of tax must be paid. Understanding how to take advantage of the myriad tax breaks when planning one's personal finances can make a significant impact in which can save you money in the long term. Investment and accumulation goals: planning how to accumulate enough money – for large purchases and life events – is what most people consider to be financial planning.
Major reasons to accumulate assets include purchasing a house or car, starting a business, paying for education expenses, saving for retirement. Achieving these goals requires projecting what they will cost, when you need to withdraw funds that will be necessary to be able to achieve these goals. A major risk to the household in achieving their accumulation goal is the rate of price increases over time, or inflation. Using net present value calculators, the financial planner will suggest a combination of asset earmarking and regular savings to be invested in a variety of investments. In order to overcome the rate of inflation, the investment portfolio has to get a higher rate of return, which will subject the portfolio to a number of risks. Managing these portfolio risks is most accomplished using asset allocation, which seeks to diversify investment risk and opportunity; this asset allocation will prescribe a percentage allocation to be invested in stocks, bonds and alternative investments.
The allocation should take into consideration the personal risk profile of every investor, since risk attitudes vary from person to person. Retirement planning is the process of understanding how much it costs to live at retirement, coming up with a plan to distribute assets to meet any income shortfall. Methods for retirement plans include taking advantage of government allowed structures to manage tax liability including: individual structures, or employer sponsored retirement plans and life insurance products. Estate planning involves planning for the disposition of one's assets after death. There is a tax due to the state or federal government at one's death. Avoiding these taxes means that more of one's assets will be distributed to one's heirs. One can leave one's assets to friends or charitable groups. Corporate finance deals with the sources of funding and the capital structure of corporations, the actions that managers take to increase the value of the firm to the shareholders, the tools and analysis used to allocate financial resources.
Although it is in principle different from managerial finance which studies the financial management of all firms, rather than corporations alone, the main concepts in the study of corporate finance are applicable to the financial problems of all kinds of firms. Corporate f
Gaborone is the capital and largest city of Botswana with a population of 231,626 based on the 2011 census, about 10% of the total population of Botswana. Its agglomeration is home to 421,907 inhabitants at the 2011 census. Gaborone City, is situated between Kgale and Oodi Hills, near the confluence Notwane River and Segoditshane River in the south-eastern corner of Botswana, 15 kilometres from the South African border; the city is served by the Sir Seretse Khama International Airport. It is an administrative district in its own right, but is the capital of the surrounding South-East District. Locals refer to the city as Gabs; the city of Gaborone is named after Chief Gaborone of the Tlokwa tribe, who once controlled land nearby. Because it had no tribal affiliation and was close to fresh water, the city was planned to be the capital in the mid-1960s when the Bechuanaland Protectorate became an independent nation; the centre of the city is a long strip of commercial businesses, called the Mall, with a semicircle-shaped area of government offices to its west.
Gaborone is one of the fastest-growing cities in the world, this has created problems with housing and illegal settlements. The city has dealt with conflicts spilling into the country from Zimbabwe and South Africa during the 1980s. Gaborone is the economic capital as well as the government capital. Gaborone is home to the Southern African Development Community, a regional economic community established in 1980. Many languages are spoken there, Setswana being the main tongue. English and Kgalagadi are spoken. Evidence shows. In more recent history, the Tlokwa left the Magaliesberg ranges to settle in the area around 1880, called the settlement Moshaweng; the word "Gaborone" means "it does not fit badly" or "it is not unbecoming". The city was called "Gaberones" by early European settlers. Gaberones, a shortening of "Gaborone's Village", was named after Chief Gaborone of the Tlokwa, whose home village was across the river from the Government Camp, the name of the colonial government headquarters.
The nickname, "GC", comes from the name "Government Camp". In 1890, Cecil John Rhodes picked Gaberones to house a colonial fort; the fort was. The city changed its name from Gaberones to Gaborone in 1969; the modern town was only founded in 1964, after a decision was taken to establish a capital for Botswana, which became a self governing territory in 1965, before becoming a independent republic at independence in September 30, 1966. In 1965, the capital of the Bechuanaland Protectorate moved from Mafeking to Gaberones; when Botswana gained its independence, Lobatse was the first choice as the nation's capital. However, Lobatse was deemed too limited, instead, a new capital city would be created next to Gaberones; the city was chosen because of its proximity to a fresh water source, its proximity to the railway to Pretoria, its central location among the central tribes, its lack of association with those surrounding tribes. The city was planned under Garden city principles with open spaces. Building of Gaborone started in mid-1964.
During the city's construction, the chairman of Gaberones Township Authority, Geoffrey Cornish, likened the layout of the city to a “brandy glass” with the government offices in the base of the glass and businesses in the “mall”, a strip of land extending from the base. Most of the early town was built within three years, as a small town designed to accommodate 20 000 people- only to develop after independence into a modern city. Buildings in early Gaborone include assembly buildings, government offices, a power station, a hospital, schools, a radio station, a telephone exchange, police stations, a post office, more than 1,000 houses; because the town was built so there was a massive influx of labourers who had built illegal settlements on the new city's southern industrial development zone. These settlements were named Naledi; the latter term means "the star", but could mean "under the open sky" or "a community that stands out from all others". In 1971, because of the growth of illegal settlements, the Gaborone Town Council and the Ministry of Local Government and Lands surveyed an area called Bontleng, which would contain low-income housing.
However, Naledi still grew, the demand for housing was greater than ever. In 1973, the Botswana Housing Corporation built a "New Naledi" across the road from the "Old Naledi". Residents from Old Naledi would be moved to New Naledi. However, the demand for housing increased yet again; the problem was solved in 1975 when Sir Seretse Khama, the president of Botswana, rezoned Naledi from an industrial zone to a low-income housing area. On 30 September 1966, Bechuanaland became the eleventh British dependency in Africa to become independent; the first mayor of Gaborone was Reverend Derek Jones. The old Gaberones became a suburb of the new Gaborone, is now known as "the Village". In the mid-1980s, South Africa attacked Botswana and conducted raids on Gaborone and other border towns; the Raid on Gaborone resulted in twelve deaths. After the 1994 General Elections, riots started in Gaborone because of high unemployment and other issues. Today, Gaborone is growing rapidly. In 1964, Gaborone only had 3,855 citizens.
The city planned on 20,000 citizens, but by 1992, the city had 138,000 people. This has led to many
Mining is the extraction of valuable minerals or other geological materials from the earth from an ore body, vein, reef or placer deposit. These deposits form a mineralized package, of economic interest to the miner. Ores recovered by mining include metals, oil shale, limestone, dimension stone, rock salt, potash and clay. Mining is required to obtain any material that cannot be grown through agricultural processes, or feasibly created artificially in a laboratory or factory. Mining in a wider sense includes extraction of any non-renewable resource such as petroleum, natural gas, or water. Mining of stones and metal has been a human activity since pre-historic times. Modern mining processes involve prospecting for ore bodies, analysis of the profit potential of a proposed mine, extraction of the desired materials, final reclamation of the land after the mine is closed. De Re Metallica, Georgius Agricola, 1550, Book I, Para. 1Mining operations create a negative environmental impact, both during the mining activity and after the mine has closed.
Hence, most of the world's nations have passed regulations to decrease the impact. Work safety has long been a concern as well, modern practices have improved safety in mines. Levels of metals recycling are low. Unless future end-of-life recycling rates are stepped up, some rare metals may become unavailable for use in a variety of consumer products. Due to the low recycling rates, some landfills now contain higher concentrations of metal than mines themselves. Since the beginning of civilization, people have used stone and metals found close to the Earth's surface; these were used to make early weapons. Flint mines have been found in chalk areas where seams of the stone were followed underground by shafts and galleries; the mines at Grimes Graves and Krzemionki are famous, like most other flint mines, are Neolithic in origin. Other hard rocks mined or collected for axes included the greenstone of the Langdale axe industry based in the English Lake District; the oldest-known mine on archaeological record is the Ngwenya Mine in Swaziland, which radiocarbon dating shows to be about 43,000 years old.
At this site Paleolithic humans mined hematite to make the red pigment ochre. Mines of a similar age in Hungary are believed to be sites where Neanderthals may have mined flint for weapons and tools. Ancient Egyptians mined malachite at Maadi. At first, Egyptians used the bright green malachite stones for ornamentations and pottery. Between 2613 and 2494 BC, large building projects required expeditions abroad to the area of Wadi Maghareh in order to secure minerals and other resources not available in Egypt itself. Quarries for turquoise and copper were found at Wadi Hammamat, Tura and various other Nubian sites on the Sinai Peninsula and at Timna. Mining in Egypt occurred in the earliest dynasties; the gold mines of Nubia were among the largest and most extensive of any in Ancient Egypt. These mines are described by the Greek author Diodorus Siculus, who mentions fire-setting as one method used to break down the hard rock holding the gold. One of the complexes is shown in one of the earliest known maps.
The miners crushed the ore and ground it to a fine powder before washing the powder for the gold dust. Mining in Europe has a long history. Examples include the silver mines of Laurium. Although they had over 20,000 slaves working them, their technology was identical to their Bronze Age predecessors. At other mines, such as on the island of Thassos, marble was quarried by the Parians after they arrived in the 7th century BC; the marble was shipped away and was found by archaeologists to have been used in buildings including the tomb of Amphipolis. Philip II of Macedon, the father of Alexander the Great, captured the gold mines of Mount Pangeo in 357 BC to fund his military campaigns, he captured gold mines in Thrace for minting coinage producing 26 tons per year. However, it was the Romans who developed large scale mining methods the use of large volumes of water brought to the minehead by numerous aqueducts; the water was used for a variety of purposes, including removing overburden and rock debris, called hydraulic mining, as well as washing comminuted, or crushed and driving simple machinery.
The Romans used hydraulic mining methods on a large scale to prospect for the veins of ore a now-obsolete form of mining known as hushing. They built numerous aqueducts to supply water to the minehead. There, the water stored in large tanks; when a full tank was opened, the flood of water sluiced away the overburden to expose the bedrock underneath and any gold veins. The rock was worked upon by fire-setting to heat the rock, which would be quenched with a stream of water; the resulting thermal shock cracked the rock, enabling it to be removed by further streams of water from the overhead tanks. The Roman miners used similar methods to work cassiterite deposits in Cornwall and lead ore in the Pennines; the methods had been developed by the Romans in Spain in 25 AD to exploit large alluvial gold deposits, the largest site being at Las Medulas, where seven long aqueducts tapped local rivers and sluiced the deposits. Spain was one of the most important mining regions, but all regions of the Roman Empire were exploited.
In Great Britain the natives had mined minerals for millennia, but after the Roman conquest, the scale of the operations increased as the Romans needed Britannia's resources gold, silver
Economy of Botswana
Since gaining independence, Botswana has been one of the world's fastest growing economies, averaging about 5% per annum over the past decade. Growth in private sector employment averaged about 10% per annum during the first 30 years of the country's independence. After a period of stagnation at the turn of the 21st century, the economy of Botswana resumed registering strong levels of growth, with GDP growth exceeding 6-7% targets. Botswana has been praised by the African Development Bank for sustaining one of the world's longest economic booms. Economic growth since the late 1960s has been on par with some of Asia's largest economies; the government has maintained budget surpluses and has extensive foreign-exchange reserves. Botswana's impressive economic record has been built on a foundation of diamond mining, prudent fiscal policies, international financial and technical assistance, a cautious foreign policy, it is rated as the least corrupt country in Africa by international corruption watchdog Transparency International.
By one estimate, it has the fourth highest gross national income at purchasing power parity in Africa, giving it a standard of living around that of Mexico and Turkey. Although Botswana's economy is considered a model for countries in the region, its heavy dependence on mining and its high rate of HIV/AIDS infection and unemployment could threaten its success in the future. Trade unions represent a minority of workers in the Botswana economy. In general they are loosely organised "in-house" unions, although the Botswana Federation of Trade Unions is consolidating its role as the sole national trade union centre in the country. Agriculture still provides a livelihood for more than 80% of the population but supplies only about 50% of food needs and accounts for only 3% of GDP. Subsistence farming and cattle raising predominate; the sector is plagued by poor soils. Tourism is important to the economy. Substantial mineral deposits were found in the 1970s and the mining sector grew from 25% of GDP in 1980 to 38% in 1998.
Unemployment stands 21% but unofficial estimates place it closer to 40%. The Orapa 2000 project doubled the capacity of the country's main diamond mine from early 2000; this will be the main force behind continued economic expansion. Economic growth slowed in 2005-2008 and turned negative in 2009 as a result of the Great Recession, contracting by 5.2%. This was exacerbated by a major global downturn in the industrial sector, which shrank by 30%, Botswana's steep economic downturn contrasted with most other African nations which experienced continued growth through this period; some of Botswana's budget deficits can be traced to high military expenditures. Some critics have criticized this level of military spending, given the low likelihood of international conflict, but these troops are used for multilateral operations and assistance efforts. One of Botswana's biggest challenges is its low level of economic diversification; as of 2008, it depended on services and agriculture linked to the trade with South Africa.
Botswana is part of the Southern African Customs Union with South Africa, Lesotho and Namibia. The World Bank reports that in 2001, the SACU had a weighted average common external tariff rate of 3.6 percent. According to the U. S. Department of Commerce, "there are few tariff or non-tariff barriers to trade with Botswana, apart from restrictions on licensing for some business operations, which are reserved for companies." Based on the revised trade factor methodology, Botswana's trade policy score is unchanged. The main export of Botswana is diamonds; as of 2017 it is the world's second largest producer of diamonds after Russia. Due to Botswana's heavy reliance on diamonds, strong global demand is vital to the health of the economy. Diamond exports provide Botswana's economy with strong supplies of foreign exchange and have offered a basis for industrial development and stimulated improvements in Botswana's infrastructure. However, despite their preeminent role in Botswana's economy, there are concerns that diamond mines are not labour-intensive enough to provide sufficient employment for Botswana's workforce, this mismatch has been cited as a factor in the country's structurally high unemployment rate.
Two large mining companies and Bamangwato Concessions, Ltd. operate in the country. BCL was placed in provisional liquidation in late 2016, following years of loss-making operations, was placed into final liquidation by the High Court in June 2017. Since the early 1980s, the country has been one of the world's largest producers of gem diamonds. Four large diamond mines have opened since independence. De Beers prospectors discovered diamonds in northern Botswana in the early 1970s; the first mine began production at Orapa followed by a smaller mine at Letlhakane. What has become the single richest diamond mine in the world opened in Jwaneng in 1982; the mine was discovered. Botswana produced a total over 30 million carats of diamonds from the three Debswana mines in 1999, is the highest producer of diamonds by value in the world. According to Debswana, the Orapa 2000 Expansion project increased the Orapa's mine annual output from 6 million carats to 12 million carats and raised total production to 26 million carats.
In 2003, Debswana opened the
Stock market index
A stock index or stock market index is a measurement of a section of the stock market. It is computed from the prices of selected stocks, it is a tool used by investors and financial managers to describe the market, to compare the return on specific investments. Two of the primary criteria of an index are that it is investable and transparent: the method of its construction should be clear. Many mutual funds and exchange-traded funds attempt to "track" an index with varying degrees of success; the difference between an index fund's performance and the index is called tracking error. Stock market indices may be classified in many ways. A'world' or'global' stock market index — such as the MSCI World or the S&P Global 100 — includes stocks from multiple regions. Regions may be defined geographically or by levels of income. A'national' index represents the performance of the stock market of a given nation—and by proxy, reflects investor sentiment on the state of its economy; the most quoted market indices are national indices composed of the stocks of large companies listed on a nation's largest stock exchanges, such as the American S&P 500, the Japanese Nikkei 225, the Indian NIFTY 50, the British FTSE 100.
Other indices may be regional, such as the FTSE Developed Europe Index or the FTSE Developed Asia Pacific Index. Indexes may be based on exchange, such as the NASDAQ-100 or NYSE US 100, or groups of exchanges, such as the Euronext 100 or OMX Nordic 40; the concept may be extended well beyond an exchange. The Wilshire 5000 Index, the original total market index, represents the stocks of nearly every publicly traded company in the United States, including all U. S. stocks traded on NASDAQ and American Stock Exchange. Russell Investment Group added to the family of indices by launching the Russel Global Index. More specialized indices exist tracking the performance of specific sectors of the market; some examples include the Wilshire US REIT which tracks more than 80 American real estate investment trusts and the Morgan Stanley Biotech Index which consists of 36 American firms in the biotechnology industry. Other indices may track companies of a certain size, a certain type of management, or more specialized criteria — one index published by Linux Weekly News tracks stocks of companies that sell products and services based on the Linux operating environment.
Some indices, such as the S&P 500, have multiple versions. These versions can differ based on how the index components are weighted and on how dividends are accounted for. For example, there are three versions of the S&P 500 index: price return, which only considers the price of the components, total return, which accounts for dividend reinvestment, net total return, which accounts for dividend reinvestment after the deduction of a withholding tax; as another example, the Wilshire 4500 and Wilshire 5000 indices have five versions each: full capitalization total return, full capitalization price, float-adjusted total return, float-adjusted price, equal weight. The difference between the full capitalization, float-adjusted, equal weight versions is in how index components are weighted. An index may be classified according to the method used to determine its price. In a price-weighted index such as the Dow Jones Industrial Average, NYSE Arca Major Market Index, the NYSE ARCA Tech 100 Index, the price of each component stock is the only consideration when determining the value of the index.
Thus, price movement of a single security will influence the value of the index though the dollar shift is less significant in a highly valued issue, moreover ignoring the relative size of the company as a whole. In contrast, a capitalization-weighted index such as the S&P 500 or Hang Seng Index factors in the size of the company. Thus, a small shift in the price of a large company will influence the value of the index. Traditionally, capitalization- or share-weighted indices all had a full weighting, i.e. all outstanding shares were included. Many of them have changed to a float-adjusted weighting which helps indexing. An equal-weighted index is one. For example, the Barron's 400 Index assigns an equal value of 0.25% to each of the 400 stocks included in the index, which together add up to the 100% whole. A modified capitalization-weighted index is a hybrid between capitalization weighting and equal weighting, it is similar to a capitalization weighting with one main difference: the largest stocks are capped to a percent of the weight of the total stock index and the excess weight will be redistributed amongst the stocks under that cap.
Moreover, in 2005, Standard & Poor's introduced the S&P Pure Growth Style Index and S&P Pure Value Style Index, attribute-weighted. That is, a stock's weight in the index is decided by the score it gets relative to the value attributes that define the criteria of a specific index, the same measure used to select the stocks in the first place. For these two indexes, a score is calculated for every stock, be it their growth score or the value score and accordingly they are weighted for the index. One argument for capitalization weighting is that investors must, in aggregate, hold a capitalization-weighted portfolio anyway; this gives the average return for all investors. Investors use theories such as modern portfolio theory to determine allocations; this considers risk and return and does not consider weights