NISM Certifications · NISM-Series-VIII: Equity Derivatives · Understanding Index
An index has a base value of 1000 and a base market capitalisation of Rs 5,00,000 crore. If the current total free-float market capitalisation of its constituents is Rs 7,50,000 crore, what is the index value?
The index value is 1500. It is computed as current market capitalisation divided by base market capitalisation, multiplied by the base value: 7,50,000 divided by 5,00,000 equals 1.5, and 1.5 times 1000 gives 1500.
- A1250
- B1500Correct
- C1750
- D666.67
Explanation
Index = (Current market cap / Base market cap) x Base value = (7,50,000 / 5,00,000) x 1000 = 1.5 x 1000 = 1500. The value 666.67 comes from inverting the ratio. The value 1250 is an unrelated arithmetic error.
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