Free-Float Methodology


Free-Float Methodology
A method by which the market capitalization of an index's underlying companies is calculated. Free-float methodology market capitalization is calculated by taking the equity's price and multiplying it by the number of shares readily available in the market. Instead of using all of the shares outstanding like the full-market capitalization method, the free-float method excludes locked-in shares such as those held by promoters and governments.

Calculated as:

Free-Float Methodology

The free-float method is seen as a better way of calculating market capitalization because it provides a more accurate reflection of market movements. When using a free-float methodology, the resulting market capitalization is smaller than what would result from a full-market capitalization method.

Free-float methodology has been adopted by most of the world's major indexes, including the Dow Jones Industrial Average and the S&P 500.

.


Investment dictionary. . 2012.

Look at other dictionaries:

  • Bombay Stock Exchange — मुंबई शेअर बाजार …   Wikipedia

  • S&P CNX Nifty — This article is about the Indian stock market index. For the set of 50 American large cap stocks, see Nifty Fifty. The Standard Poor s CRISIL NSE Index 50 or S P CNX Nifty nicknamed Nifty 50 or simply Nifty (NSE: ^NSEI), is the leading index for… …   Wikipedia

  • DAX — A stock index that represents 30 of the largest and most liquid German companies that trade on the Frankfurt Exchange. The prices used to calculate the DAX Index come through Xetra, an electronic trading system. A free float methodology is used… …   Investment dictionary

  • Capitalization-weighted index — A capitalization weighted index is an index whose components are weighted according to the total market value of their outstanding shares. Also called a market value weighted index. The impact of a component s price change is proportional to the… …   Wikipedia

  • Russell Indexes — Russell s family of global equity indexes, including the industry leading U.S. equity indexes (note that Russell uses indexes rather than indices ), allows investors to track the performance of distinct market segments worldwide.Many investors… …   Wikipedia

  • Medium of exchange — Economics …   Wikipedia

  • Fundamentally based indexes — are indices in which stocks are weighted by a fundamental factor (e.g. sales, book value, dividends) or composite of fundamental factors. This stands in direct contrast to capitalization weighted indices. Fundamentally based indexes were… …   Wikipedia

  • Dow Jones Sustainability Index — Launched in September 1999, the Dow Jones Sustainability Indexes (DJSI) are a family of indexes evaluating the performance of the world’s leaders in sustainability. They are the longest running global sustainability benchmarks worldwide and have… …   Wikipedia

  • undersea exploration — Introduction       the investigation and description of the ocean waters and the seafloor and of the Earth beneath. Primary objectives and accomplishments       Included in the scope of undersea exploration are the physical and chemical… …   Universalium

  • Holocaust denial — Antisemitism Part of Jewish history …   Wikipedia


Share the article and excerpts

Direct link
Do a right-click on the link above
and select “Copy Link”

We are using cookies for the best presentation of our site. Continuing to use this site, you agree with this.