NISM Certifications · NISM-Series-VIII: Equity Derivatives · Understanding Index
An index has a base value of 1000 and a base market capitalisation of Rs 20,00,000 crore. If the current free-float market capitalisation of the index constituents is Rs 30,00,000 crore, with no change in index divisor-related adjustments, what is the index value?
The index value is 1,500. It equals current market capitalisation divided by base market capitalisation, multiplied by the base value: 30,00,000 divided by 20,00,000 gives 1.5, and 1.5 times 1000 equals 1,500.
- A1,250
- B1,500Correct
- C1,333
- D2,000
Explanation
Index value = (current market cap / base market cap) x base value = (30,00,000 / 20,00,000) x 1000 = 1.5 x 1000 = 1,500. Check: 1,500/1000 = 1.5 and 20,00,000 x 1.5 = 30,00,000. The 1,333 option wrongly inverts the ratio and divides base by current.
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