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The Market Definition and Quiz

The term can be confusing for the beginner, and it's too important to ignore.
  1. Define - Define The Market for Finance.
  2. Context - Use The Market in a sentence.
  3. Quiz - Test yourself.
face pic by Paul Alan Davis, CFA
Updated: February 17, 2021
The Market may be used as a quick off-the-cuff remark about the direction and magnitude of returns on a local market index, like the Dow Industrials in the US or DAX in Germany. Learn about distinctions below.

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Learning About The Market in Finance


The Market has many contexts. It typically refers to a local equity market index. In portfolio theory, it refers to the whole set of investable assets, like stocks, bonds, real estate, collectibles and even human capital.

When referring to global stocks investors may refer to the MSCI World or the S&P Global 1200. It is also used more narrowly to refer to a basket of stocks in a country, like the S&P 500, FTSE Index or Nikkei 225. Some people also use the term Market as a catch-all for index and benchmark; however, the terms are subtly different.

Synonyms: The Market, Market Portfolio

For context, it's important to remember the distinction between casual conversations about The Market and the more theoretical topic concerning the Market Portfolio. So clarification is important, as is certainty around the benchmark of focus.

In a Sentence

Lia:  My Dad says Wall Street creates confusing terms like Market to confuse investors.
Doc:  I can't disagree.


Many terms have 4-5 minute videos showing a derivation and explanation. If this term had one, it would appear here.

Videos can also be accessed from the YouTube Channel.

Video Script

If this term had a video, the script would be here.


Click box for answer.

Which is not a drawback of using the Dow Industrials Index as a measure for the Market? | Diversification or Familiarity or Price-weighting methodology

Familiarity. The other two are valid drawbacks.

When the news media and investors casually refer to news impacts on The Market, they typically refer to which asset class? | Equity or Fixed Income or Real Estate

Equity, like a broad stock market index.

Questions or Comments?

Still unclear on The Market? Check out the Excel financial modeling series Quant 101.

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