Write the Computational methodology for Construction of Stock indices?

1.	Write the Computational methodology for Construction of Stock indices?
Answer» The computational methodology followed for construction of stock market indices are: 1. Free Float Market Capitalization Weighted Index, 2. Market Capitalization Weighted index and the 3. Price Weighted Index The Free float market capitalization is calculated in the following manner: Free Float Market Capitalisation = Issue Size * Price * Investible Weight Factor The Index in this case is calculated as per the formulae given below: Index = \(\cfrac{Free\,float\,current\,market\,capitalization}{Free\,Float Base\,Market\,Capitalization}\) *Base Value The India Index Services Limited (IISL), aa subsidiary of NSE Strategic Investment Corporation Limited, introduced the free float market capitalization methodology.

Answer»

The computational methodology followed for construction of stock market indices are:

1. Free Float Market Capitalization Weighted Index,

2. Market Capitalization Weighted index and the

3. Price Weighted Index

The Free float market capitalization is calculated in the following manner:

Free Float Market Capitalisation = Issue Size * Price * Investible Weight Factor

The Index in this case is calculated as per the formulae given below:

Index = \(\cfrac{Free\,float\,current\,market\,capitalization}{Free\,Float Base\,Market\,Capitalization}\) *Base Value

The India Index Services Limited (IISL), aa subsidiary of NSE Strategic Investment Corporation Limited, introduced the free float market capitalization methodology.

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