Capitalization-Weighted Index

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Capitalization-Weighted Index

A stock index which is computed by adding the capitalization (float times price) of each individual stock in the index, and then dividing by the divisor. The stocks with the largest market values have the heaviest weighting in the index. See also Float, Divisor.

Capitalization-Weighted Index

An index in which the price is determined by the price of individual stocks, weighted for total market value. For example, if the price of a component stock of the index changes, its effect on the index as a whole is proportionate to share's price multiplied by the number of shares the company has outstanding. This means that changes in price will affect the index more if the component company has greater value. Most non-American market value-weighted indices give further weighting (called float-weighted indexing) to properly account for partial government ownership of many large corporations. This method of index weighting contrasts with a price-weighted index, in which all price changes are weighted differently, and a market share-weighted index, which weights only by the number of shares outstanding and not by their value. Major examples of a market value-weighted index include the NASDAQ Composite Index and the Standard & Poor's 500. The latter uses float-weighted indexing to match its calculations more closely with foreign counterparts.
References in periodicals archive ?
7 percent, the NIC-50 - a market capitalization weighted index which tracks the 50 most traded KSE-listed companies, rose by 196.
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We believe that more institutions will be embracing our fundamental methodology as an alternative to or a complement to their existing capitalization weighted index positions.
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Free-Float Adjusted Modified Market Capitalization Weighted Index
The Index is a modified market capitalization weighted index of companies primarily involved in the mining for gold and silver and listed on any of the U.
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Free-Float Adjusted Modified Capitalization Weighted Index
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