Market Basket

What is a 'Market Basket'

A market basket is a subset of products or securities that is designed to mimic the performance of an overall market. Market baskets contain a fixed selection of items, which are used to track such things as inflation, prices or performance levels.

BREAKING DOWN 'Market Basket'

For investors, the market basket is the principal idea behind index funds. A sample of stocks, bonds or other securities are placed in a portfolio that is expected to represent all aspects of the market. This provides investors with a benchmark against which to compare their investment returns.

Another popular market basket relates to the Consumer Price Index (CPI), which tracks a variety of consumer goods. The CPI looks at the price levels of consumer products and provides an estimate for inflation.

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RELATED FAQS
  1. How do I use a "basket" option?

    A basket option is an option with an underlying asset "basket" of securities, currencies or commodities. Basket options are ... Read Answer >>
  2. How is the basket of goods selected for the Consumer Price Index?

    Read about alterations in the market basket for the consumer price index, a measure of approximate consumer price changes ... Read Answer >>
  3. How does the Bureau of Labor Statistics determine the Consumer Price Index (CPI)?

    Changes in the average price level of more than 200 goods and services across the U.S. economy are used to determine the ... Read Answer >>
  4. Will the consumer price index (CPI) be updated or revised in the future?

    Learn about the consumer price index (CPI) and understand how its purpose and calculation make it necessary to continually ... Read Answer >>
  5. What are some limitations of the consumer price index (CPI)?

    Explore some of the basic limitations of the widely used economic indicator, the consumer price index, or CPI, and examine ... Read Answer >>
  6. Is it possible to invest in an index?

    First, let's review the definition of an index. An index is essentially an imaginary portfolio of securities representing ... Read Answer >>
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