NISM Certifications · NISM-Series-VIII: Equity Derivatives · Understanding Index
An index has a base market capitalisation of Rs 4,00,000 crore and a base index value of 1,000. If the current market capitalisation of the constituents is Rs 6,00,000 crore, what is the current index value, assuming no changes to the index divisor?
The index value is 1,500. It is computed as current market capitalisation divided by base market capitalisation, multiplied by the base value: 6,00,000 divided by 4,00,000 is 1.5, and 1.5 times 1,000 gives 1,500.
- A1,200
- B1,500Correct
- C1,667
- D2,000
Explanation
Index value = (Current market cap / Base market cap) x Base value = (6,00,000 / 4,00,000) x 1,000 = 1.5 x 1,000 = 1,500. Option 1,667 wrongly divides base by current. Check: 1,500/1,000 = 1.5 = 6/4.
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