Free-float market capitalization-weighted index: Difference between revisions
WikiSysopIG (talk | contribs) Created page with "'''Free-float market capitalization-weighted index''' (also known as a '''float-adjusted market capitalization-weighted index''') is a type of stock market index in which the weight assigned to each constituent security is based on its '''free-float market capitalization''' rather than its total market capitalization. Under this methodology, only shares that are readily available for public trading are included in the calculation, while shares held by promote..." |
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Free-float market capitalization is calculated as: | Free-float market capitalization is calculated as: | ||
<math> \text{Free-float Market Capitalization} = \text{Share Price} \times \text{Free-float Shares Outstanding} </math> | <math> | ||
\text{Free-float Market Capitalization} = | |||
\text{Share Price} \times \text{Free-float Shares Outstanding} | |||
</math> | |||
The weighting assigned to each constituent is determined by: | The weighting assigned to each constituent is determined by: | ||
<math> | |||
\text{Company Weight} = | |||
\frac{\text{Company Free-float Market Capitalization}} | |||
{\text{Total Free-float Market Capitalization of the Index}} | |||
</math> | |||
As a result, companies with larger investable market capitalizations have a greater influence on the movement of the index. | As a result, companies with larger investable market capitalizations have a greater influence on the movement of the index. | ||