📢 Too many exams? Don’t know which one suits you best? Book Your Free Expert 👉 call Now!
  • google app store apple app store
    • ✖

      Question

      The benchmark indices NIFTY 50 and SENSEX follow which

      methodology for calculating the weightage of constituent stocks?
      A Equal-weight method Correct Answer Incorrect Answer
      B Paid-up Capital method Correct Answer Incorrect Answer
      C Full Market Capitalization method Correct Answer Incorrect Answer
      D Free-float Market Capitalization method Correct Answer Incorrect Answer
      E Authorized Share Capital method Correct Answer Incorrect Answer

      Solution

      Both NIFTY 50 (managed by NSE Indices) and SENSEX (managed by BSE) use a free-float market capitalization–weighted methodology for index calculation. • Free-float market capitalization = Share price × Number of shares available for public trading (excluding promoter holdings, government holdings, ESOPs, etc.). • This ensures that only shares actually available for trading influence the index weight, making the indices more reflective of the market. • Stocks with larger free-float market capitalization carry higher weightage in the index.

      Practice Next
      More Financial Management Questions

      Relevant for Exams:

      ask-question