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NISM Certifications · NISM-Series-XV: Research Analyst · Terminology in Equity and Debt Markets

In equity markets, the term 'free float market capitalisation' of a company refers to:

Free float market capitalisation is the share price multiplied by only those shares readily available for trading by the public, excluding promoter and other locked-in or strategic holdings. It differs from full market capitalisation, which uses all issued shares.

  1. AMarket price multiplied by the total number of issued shares
  2. BMarket price multiplied by shares held by promoters only
  3. CMarket price multiplied by shares readily available for trading by the public, excluding promoter and other locked-in holdingsCorrect
  4. DBook value multiplied by the number of shares available for trading

Explanation

Free float market cap counts only shares available for public trading, excluding strategic holdings such as promoter stakes. Full market cap uses all issued shares. Many indices such as the Nifty 50 use this method for weights.

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