NISM Certifications · NISM-Series-VIII: Equity Derivatives · Understanding Index
An index has a base value of 1000 and base market capitalisation of Rs 50,00,000 crore. If the current free-float market capitalisation is Rs 75,00,000 crore, what is the index value, assuming no adjustments are required?
The index value is 1,500. It is computed as current market capitalisation divided by base market capitalisation, which is 1.5, multiplied by the base index value of 1000. The index rises in the same proportion as the market capitalisation.
- A1,200
- B1,500Correct
- C1,333
- D750
Explanation
Index = (current market cap / base market cap) x base value = (75,00,000 / 50,00,000) x 1000 = 1.5 x 1000 = 1500. Option 1,333 wrongly divides base by current; 750 inverts the ratio with the wrong scaling.
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