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NISM Certifications · NISM-Series-VIII: Equity Derivatives · Understanding Index

An index has two stocks. Stock A: price Rs 400, free-float shares 10 crore. Stock B: price Rs 200, free-float shares 30 crore. Base free-float market cap is Rs 5,000 crore with base value 1000. Stock B's price rises 10% and A is unchanged. What is the new index value?

Using the given data, the new index value is 2,120, which is not among the options, so this question is flawed.

  1. A1,200
  2. B1,240Correct
  3. C1,400
  4. D1,100

Explanation

Initial cap = 400x10 + 200x30 = 4,000 + 6,000 = Rs 10,000 crore, giving index 10,000/5,000 x 1000 = 2,000. B rises to 220: cap = 4,000 + 6,600 = 10,600, so index = 10,600/5,000 x 1000 = 2,120. None of the options match, so recheck: base cap must be consistent; options assume a base of Rs 10,000 crore... Using the stated data the index is 2,120.

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