NISM Certifications · NISM-Series-XV: Research Analyst · Terminology in Equity and Debt Markets
In the equity market, the term 'free float' of a company refers to:
Free float means the shares readily available for trading by the public, after excluding promoter holdings, strategic holdings and locked-in shares. Indices typically use free-float market capitalisation to reflect investable shares rather than total issued shares.
- AShares held by promoters and their associates
- BShares readily available for trading by the public, excluding locked-in and strategic holdingsCorrect
- CAll shares issued by the company including those held by promoters
- DShares bought back by the company
Explanation
Free float is the portion of issued shares that is available for public trading, excluding promoter, strategic and locked-in holdings. Free-float market capitalisation is commonly used in index construction.
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