ABX index

Used to derive the value of the subprime mortgage investment market. The index uses a series of credit default swap contracts to determine the overall value of mortgages made to borrowers with weak credit. It is made up of four series, each with 20 bonds that consist of groups of subprime mortgages. Using this index, which is an accumulation of mortgages made at different times, investing institutions are able to determine whether the market for these securities is worsening or improving. They are also able to use the index to hedge against losses on subprime mortgages they may hold. Also called Asset-Backed Securities Index.