UPSC Prelims 2008 Q122: Indian Economy – Financial Markets & Capital Markets
What does S & P 500 relate to?
- (a) Supercomputer
- (b) A new technique in e - business
- (c) A new technique in bridge building
- (d) An index of stocks of large companies
Answer: (d) An index of stocks of large companies
Explanation
What S&P 500 relates to
This widely-cited financial benchmark tracks the performance of major American companies.
| Option | Verdict | Reason |
|---|---|---|
| (a) Supercomputer | Incorrect | Unrelated to computing hardware |
| (b) A new technique in e-business | Incorrect | Unrelated to e-commerce |
| (c) A new technique in bridge building | Incorrect | Unrelated to engineering |
| (d) An index of stocks of large companies | Correct | The S&P 500 is a stock market index tracking 500 large publicly-traded American companies |
S&P 500 facts:
| Point | Detail |
|---|---|
| Nature | Stock market index |
| Tracks | 500 large companies |
Answer: (d) An index of stocks of large companies.
Why each option is right or wrong
- (a) Incorrect. S&P 500 is unrelated to supercomputing.
- (b) Incorrect. It is also unrelated to e-business techniques.
- (c) Incorrect. It is also unrelated to bridge engineering.
- (d) CORRECT. S&P 500 is a stock market index of large companies.
Key point
The S&P 500 is a stock market index tracking 500 large publicly-traded American companies.
Remember
S&P 500: an index of stocks of large companies.
Common mistakes
- Confusing the S&P 500's financial-index nature with unrelated technical fields.
- Not knowing the basic stock market index concept.
- Mixing up this well-known financial benchmark with unrelated technology/engineering terms.
Exam tip
S&P 500 = stock market index of 500 large US companies. A foundational financial-markets fact.
Sources
- S&P Dow Jones Indices — S&P 500: index methodology
- Encyclopaedia Britannica — S&P 500