DEFINITION of 'KBW Bank Index'

An economic index consisting of the stocks of 24 banking companies. This index serves as a benchmark of the banking sector. This index trades on the Philadelphia Stock Exchange, where it was created. The KBW Index is named after Keefe, Bruyette and Woods, a recognized authority in the banking industry.

BREAKING DOWN 'KBW Bank Index'

The KBW Index trades under ticker symbol BKX. The index is weighted according to capitalization and represents major banks and money centers from across the country. Mathematically, the index is based on a tenth of the value of the Keefe, Bruyette and Woods Index (KBWI). It began trading options in September of 1992.

RELATED TERMS
  1. ABA Bank Index

    A banking index that is made up of community banks and banking ...
  2. Composite

    A grouping of equities, indexes or other factors combined in ...
  3. Total Return Index

    A type of equity index that tracks both the capital gains of ...
  4. Index

    A statistical measure of change in an economy or a securities ...
  5. Price-Weighted Index

    A stock index in which each stock influences the index in proportion ...
  6. Interest Rate Index

    An index that is based on the interest rate of a financial instrument ...
Related Articles
  1. Investing

    Goldman Stock Overrated, Gets a Downgrade: KBW

    The firm's shares dipped this week after posting its worst-ever commodities result.
  2. Investing

    Bank of America Stock Can Still Pay: KBW (BAC)

    Despite concerns about an overheated stock, Bank of America remains one of the better ways to play the expected rise in interest rates, according to KBW.
  3. Investing

    What is an Index?

    An index is a statistical means of calculating a change in an economy or market.
  4. Trading

    Using Index Futures To Predict The Future

    Want to know whether the stock market will open up or down? Check out the index futures.
  5. Investing

    Bank of America Boosted by Expected Rate Hike (BAC)

    Valuation concerns at Bank of America – or any of the "big four" banks – could be a moot issue if interest rates rise.
  6. Investing

    The Hidden Flaws of Index Investing

    Index investing isn't always better than active investing. Here's why.
  7. Investing

    ETF Options Vs Index Options

    Investors have much to consider when they’re deciding between ETF and index options. Here's help in making the decision.
  8. Investing

    ETF Tracking Errors: Protect Your Returns

    Tracking errors tend to be small, but they can still adversely affect your returns. Learn how to protect against them.
  9. Investing

    Understanding Capitalization-Weighted Indexes

    A capitalization-weighted index is a market index whose individual components are weighted according to their market capitalization.
RELATED FAQS
  1. What are the main benchmarks that track the banking sector?

    Read about the most important benchmarks that can be used to track the banking sector, and why banking benchmarks tend to ... Read Answer >>
  2. Which benchmarks / indexes track the automotive sector?

    Explore some of the major benchmark equity indexes worldwide that analysts and investors use to track the performance of ... Read Answer >>
  3. What is index option trading and how does it work?

    Learn about stock index options, including differences between single stock options and index options, and understand different ... Read Answer >>
  4. What is the difference between the QQQ ETF and other indexes?

    Find out more about the PowerShares QQQ Trust, the index the QQQ tracks, and the difference between QQQ, the SPY and Nasdaq ... Read Answer >>
  5. How do indexes determine which stocks are removed or added to them?

    Stock indexes are formed based on the kinds of stocks or financial securities they want to track. For example, the Standard ... Read Answer >>
  6. How does a point change in a major index effect its equivalent exchange-traded fund?

    The S&P 500 and Dow Jones Industrial Index (DJIA) are two of the most well-known indexes tracking the movement of the U.S. ... Read Answer >>
Hot Definitions
  1. Call Option

    An agreement that gives an investor the right (but not the obligation) to buy a stock, bond, commodity, or other instrument ...
  2. Pro-Rata

    Used to describe a proportionate allocation. A method of assigning an amount to a fraction, according to its share of the ...
  3. Private Placement

    The sale of securities to a relatively small number of select investors as a way of raising capital.
  4. AAA

    The highest possible rating assigned to the bonds of an issuer by credit rating agencies. An issuer that is rated AAA has ...
  5. Backward Integration

    A form of vertical integration that involves the purchase of suppliers. Companies will pursue backward integration when it ...
  6. Pari-passu

    A Latin phrase meaning "equal footing" that describes situations where two or more assets, securities, creditors or obligations ...
Trading Center