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how is the ftse 100 index calculated
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For each of the 100 companies, the share value is multiplied by the number of shares issued, to give the market value of that company.
All 100 market values are added together.
The total is then divided by the 'index divisor', which is initially arbitrary and then set to reflect changes in the capitalisation of member companies.
That's the very simplified version. It doesn't really explain the index divisor and it completely ignores 'free float factors'. If you want all of the details (including some formulae which remind me of the days when I studied for my maths degree), see here:
http://www.ftse.com/I...s/uk_calculation.pdf#
Chris
All 100 market values are added together.
The total is then divided by the 'index divisor', which is initially arbitrary and then set to reflect changes in the capitalisation of member companies.
That's the very simplified version. It doesn't really explain the index divisor and it completely ignores 'free float factors'. If you want all of the details (including some formulae which remind me of the days when I studied for my maths degree), see here:
http://www.ftse.com/I...s/uk_calculation.pdf#
Chris
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