Skip to content

CMA Intermediate · Financial Management and Business Data Analytics · Capital Market

The Sensex-type index of a small market is computed on the free-float market capitalisation method with a base value of 100 and a base market capitalisation of Rs 50,000 crore. If the current free-float market capitalisation of the index companies is Rs 80,000 crore, what is the index value?

The index value is 160. Under the free-float market capitalisation method, the index equals current free-float market capitalisation divided by base market capitalisation, times the base value: 80,000 divided by 50,000 times 100. Inverting the ratio gives the incorrect 62.5.

  1. A62.5
  2. B160Correct
  3. C150
  4. D180

Explanation

Index = (current free-float market cap / base market cap) x base value = (80,000/50,000) x 100 = 160. The 62.5 figure inverts the ratio, which is the wrong base.

Did you get it right without looking?

One question tells you little. A timed set on Capital Market shows your real accuracy, how long you take and where you lose marks.

Practise Capital MarketFree diagnostic mock

More Capital Market questions