NISM Certifications · NISM-Series-VIII: Equity Derivatives · Understanding Index
An index has a current market capitalisation of Rs 6,00,000 crore (free-float) and a base market capitalisation of Rs 2,00,000 crore with a base index value of 1,000. What is the index value?
The index value is 3,000. It is the ratio of current to base market capitalisation, 6,00,000 divided by 2,00,000, which equals 3, multiplied by the base index value of 1,000.
- A1,000
- B2,000
- C3,000Correct
- D6,000
Explanation
Index = (Current market cap / Base market cap) x Base value = (6,00,000 / 2,00,000) x 1,000 = 3 x 1,000 = 3,000. Check: 3,000/1,000 = 3 equals 6,00,000/2,00,000. Option 6,000 comes from wrongly using a base value of 2,000.
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