What are indices?

Indices are a measurement of price of a certain set of securities listed on an exchange. Indices are also called an index. Very commonly known indices are:

All these indices track a specific type of stock mostly based on size or market capitalization (current stock price * amount of outstanding shares). Companies can go in and out of indices many times. Most indices track the biggest companies. If a company goes bankrupt or loses a lot of net worth, the company leaves the index and another company takes its spot. When an ETF or mutual fund tracks an index, it tracks an indice.