BRAZIL Bovespa Index (IBovespa) is the main indicator of the average performance of the BM&FBovespa exchange.

The IBovespa covers more than 80% of the trades and approximately 70% of the market capitalization of the exchange[1].

Calculations and Weighting

The IBovespa uses the Negotiability index to calculate the criteria and weighting of the stocks on the index. The Negotiability Index helps us understand the representation of the stock in the cash market on the exchange, which allows us to ascertain the participation of every component of the IBovespa. This is similar to the Free float method used by various indices using the market capitalization method for calculating the index level.

[2] Negotiabiliy Index = o ni = number of trades carried out for stock "i" o vi = value created from the trades of stock "i" o N = Total number of trades on the BM&F Bovespa o V = Total value created by the N number of trades in the BM&F Bovespa

GERMAN

Weighting and Calculation

The DAX indices are all calculated using capitalization weighted index using the total return Laspeyres index for calculations[1]. DAX Indices are weighted by shares.

The formula is:

Current index = Current total market cap of constituents Previous Value / Previous Period In comparison, the Shanghai SSE indices use the Paasche weighted composite price index formula[2]. This means that the index bases its calculations on its previous period for its calculations as compared to the Shanghai Composite Index, which bases it on the base period. The Base date for the index is 30 December, 1987 and it was started from a base value of 1,000. The Xetra system calculates the index after every 1 minute.[3] For more information, go to how stock indices work

INDEX (THEORY)

An index, when used with respect to financial markets, is a statistical measure of change in a securities market. Indexes, or indices (both are correct in American English), are imaginary portfolios of securities (usually stocks) representing a particular market or a portion of it. This is the chart for the Dow Jones Industrial Average. Scroll down for a list of major world indices on Wikinvest. Generally, an index has three main purposes:

An Index shows the performance of a basket of equities instead of just a single equity IE an index is diversified. An index can show the performance of a particular class of assets - for example, a biotechnology index would show the performance of a diverse group of biotech companies over time. An index can also be used to provide a generic securities category for passive management and derivatives (passive investing).

Each index is calculated using its own methodology, and its value is expressed in terms of a change from an original base value. So the numerical value of an index is not as significant as the percent change in the index. Investing in indexes is a way to invest in the performance of a broad market sector, or in the market as a whole. But to trade an index, an investor must buy or sell through a third party. Stock and bond market indexes are used to make mutual funds and exchange-traded funds (ETFs) that mirror the performance of the index. Regardless of security type, indexing can cover broad categories such as a Total Market Index like (VTI), index investing can also be more micro and track sectors such as Small Cap Brazilian Companies (BRF). When investing in an Exchange Traded Funds that tracks an index, an investor buys or sells an entire group of stocks when trading that particular ETF - an example is the StreetTRACKS Dow Jones Global Titans Index Fund (DGT). Some indexes allow investors to put money into commodities - an example is the PowerShares DB Commodity Index Tracking Fund (DBC) while others, like the Baltic Dry Index (BDI), are important economic indicators used to measure the rates under which services are sold in a particular industry (in the case of the BDI, dry bulk shipping). Still others are forward looking, measuring the anticipated volatility of the markets an example is the Nasdaq Volatility Index (VXN)

FTSI This article describes an index that measures the performance of an exchange, industry or a geographic region. View articles referencing this index. called the footsie, the Financial Times Stock Exchange 100 is

a market capitalization weighted index representing the top 100 blue chip companies on the London Stock Exchange. The index is said to map more than 80% of the total capitalization in the United Kingdom. Stocks are free-float weighted to ensure that only the investable opportunity set is included within the index. [1]. The FTSE group manages the Index, which in turn is a joint venture between the Financial Times and the London Stock Exchange.

Weighting and Calculations

They involve the total market capitalization of the companies weighted by their effect on the index, so the larger stocks would make more of a difference to the index as compared to a smaller market cap company. This is also called the free float method. The basic formula for any index is (be it capitalization weighted or any other stock index)[2]:

Index level= (Price of stock* Number of shares)*Free float factor/ Index Divisor.

The Free float Adjustment factor represents the proportion of shares that is freefloated as a percentage of issued shares and then its rounded up to the nearest mulitple of 5% for calculation purposes. To find the free-float capitalization of a company, first find its market cap (number of outstanding shares x share price) then multiply its free-float factor. The free-float method, therefore, does not include restricted stocks, such as those held by company insiders. While one might track this portfolios value in dollar terms, it would probably be an unwieldy number for example, the S&P 500 market value is roughly $11.8 trillion. Rather than deal with ten or more digits, the figure is scaled to a more easily handled number, currently around 1250. Dividing the portfolio market value by a factor, usually called the Index divisor, does the scaling. Continuity in index values is maintained by adjusting the divisor for all changes in the constituents share capital after the base date. This includes additions and deletions to the index, rights issues, share buybacks and issuances, and spin-offs. The divisors time series is, in effect, a chronological summary of all changes affecting the base capital of the index. The divisor is adjusted such that the index value at an instant just prior to a change in base capital equals the index value at an instant immediately following that change[3]

NYSE:

NYSE Composite (NYSE: NYA) is a stock market index covering all common stock listed on the New York Stock Exchange, including American Depositary Receipts, Real Estate Investment Trusts, tracking stocks, and foreign listings. Over 2,000 stocks are covered in the index, of which over 1,600 are from United States corporations and over 360 are foreign listings; however foreign companies are very prevalent among the largest companies in the index: of the 100 companies in the index having the largest market capitalization (and thus the largest impact on the index), more than half (55) are non-U.S. issues.[1] This includes corporations in each of the

ten industries listed in the Industry Classification Benchmark. It uses free-float market cap weighting.

HANK KANG STOCK EXCHANGE: Hang Seng index is a market capitalization weighted index that follows the top 40 or so companies that trade on the Hong Kong Stock Exchange. The index covers over 65% of the total market capitalization of the exchange[1].The index is maintained and published by the Hang Seng Indexes Company Ltd, a subsidary of the Hang Seng Bank in HK, since 1969. These companies are classified into sub categories namely, Commerce and Industry, Finance, Properties and Utilities. These sub-categories are published as indexes as well.

Stock Selection Criteria

Constituent stocks of the HSI are selected by a rigorous process of detailed analysis, supported by extensive external consultation. To be eligible for selection, a company:

must be among those companies that constitute the top 90% of the total market value of all eligible shares listed on the SEHK (market value is expressed as an average of the past 12 months); must be among those companies that constitute the top 90% of the total turnover of all eligible shares listed on the SEHK (turnover is aggregated and individually assessed for eight quarterly sub-periods over the past 24 months); and should normally have a listing history of at least 24 months on the SEHK[2]

Weighting
The Hang Seng is calculated with this formula:

[3]

[4]

[5]

Free Float Adjustment

The Free float Adjustment factor, or FAF for short, represents the proportion of shares that is freefloated as a percentage of issued shares and then its rounded up to the nearest mulitple of 5% for calculation purposes. The compilation with a Cap factor was switched to the FAF, September 2006 onwards. The cap factor was originally calculated in each regular half yearly, such that none of the stocks weighed in more than 15% percent.

Contents

1 Stock Selection Criteria 2 Weighting o 2.1 Free Float Adjustment 3 Composition 4 References

To find the free-float capitalization of a company, first find its market cap (number of outstanding shares x share price) then multiply its free-float factor. The free-float factor is determined by the percentage of floated shares to outstanding. For example, if a company has a float of 4 million shares and outstanding shares of 5 million, the percent of float to outstanding is 80%. A company with an 80% free float falls in the 75-80% free-float factor, or 0.80, which is then multiplied by its market cap. For example: $120 million (12 million shares at $10/share) x 0.80 = $96 million.[6]

KOSPI 200 is the South Korean index, indicative of the top 200 stocks in the Korea Exchange. It maps over 70% of the total capitalization of the exchange and is the most liquid index for the South korean market. The KOSPI 200 was started on January 3rd, 1990 with a base value of 100[1]. The Futures and Options markets in Korea use this index to base their calculations. KOSPI 200 is updated every 2 seconds and is published by the statistical KRX publication of the Korean Exchange[2]

Weighting and Calculations

The KOSPI is calculated as follows with Current Market Capitalization (=market capitalization at the time of comparison) as the numerator and Base Market Capitalization (=market capitalization as of January 4, 1980) as the denominator. That is: Current index = Current total market cap of constituents 100 / Base Market Capitalization[3] The base market capitalization is adjusted when there is a change in the value due to rights offering, new listing, delisting, mergers, etc. So the New Base Market Capitalization would be[4]: Past Market Capitalization*(Current Market Cap +- change in market cap)/Current Market Cap on the day before the change.

rticle is about the S&P 500 index. For the article on the company SPX Corporation, click here. The S&P 500 is a stock market index containing the stocks of 500 American Large-Cap corporations. The index is owned and maintained by Standard & Poor's, a division of McGrawHill. All of the stocks in the index trade on the two largest US stock markets, the New York Stock Exchange and Nasdaq. The Dow Jones Industrial Average and the S&P 500 are the most widely watched indexes of large-cap US stocks. The S&P 500 is often quoted using the symbol SPX or INX, and may be prefixed with a caret (^) or with a dollar sign ($). Many index funds and exchange-traded funds track the performance of the S&P 500 by holding the same stocks as the index, in the same proportions, and thus attempt to match its performance (before fees and expenses). Partly because of this, a company which has its stock added to the list may see a boost in its stock price as the managers of the mutual funds must purchase that company's stock in order to match the funds' composition to that of the S&P 500 index. Additionally, the S&P 500 index is often used as a baseline level of performance against which mutual funds and other asset managers' performance is measured.

Composition of the S&P 500 Index

S&P 500 sector break-down[1] The S&P 500 index is not made up of the 500 largest corporations in the U.S., since other factors such as liquidity of the stock and industry grouping are also considered in selecting members for the index.

Contents

1 Composition of the S&P 500 Index 2 S&P 500 Index Calculation o 2.1 Impact of constituent's share price change o 2.2 Index Maintenance 3 Investing in the S&P 500 Index 4 Historical S&P Performance 5 References

The criteria for being added to the index are as follows:

Must be a "U.S. company". This is determined by looking at location of company's operations, its corporate structure, its accounting structure and its exchange listing. Must have minimum $5 billion market capitalization. The minimum is reviewed occasionally to ensure that it takes in to account market conditions. Must have a minimum public float of 50%, which means that at least half of the company's share must be publicly tradable. Must be financially viable. Companies are expected to have at least four consecutive quarters of positive as-reported earnings

Must be operating companies. Closed-end funds, holding companies, partnerships, investment vehicles and royalty trusts are not eligible while Real Estate Investment Trusts (REITs) and business development companies (BDCs) are eligible for inclusion to the index. Should have adequate liquidity and moderate price per share. The ratio of annual dollar value traded to market capitalization for the company should be 0.30 or greater. Very low or extremely high priced shares are also considered to be illiquid. The index must remain reflective of the various sectors in the U.S. economy. This signifies that even if a company has all the qualifying characteristics, it may not be selected if the sector it operates in is already accounted for in the index.

It should be noted that these criteria are applicable to companies that are being added to the S&P 500. Since the index committee attempts to minimize unnecessary turnover in index membership, existing companies do not have to diligently maintain these conditions to remain in the index. However, companies that substantially violate one or more of these criteria are removed from the index and replaced by a new company. As a result, on a year-to-year basis, the composition of the index only changes slightly.

composite index comprises of all the A shares and B shares listed on the Shanghai Stock Exchange. The index can be tracked all the way back to Dec 19, 1990 and to a price of 100. Index trade volume is scaled down by a factor of 1000.

Weighting and Calculation

SSE Indices are all calculated using a Paasche weighted composite price index formula[1], similar to the CSI 300 Index. This means that the index is based on its base period for its calculations as compared to certain other exchanges, like the DAX, which base their calculations on the previous period (the laspyres price index calculation). [2] Composite Indices and Sector Indices are weighted by shares.

The formula is:

Current index = Current total market cap of constituents Base Value / Base Period Total market capitalization = (price shares issued)[3]

The B share stocks are generally denominated in US dollars for calculation purposes. For calculation of other indices, B share stock prices are converted to RMB at the applicable

exchange rate (the middle price of US dollar on the last trading day of each week) at China Foreign Exchange Trading Center and then published by the exchange.

Sensex is a market capitalized index that tracks 30 stocks from the Bombay Stock Exchange, which are representative of the stocks from various sectors of the Bombay Stock Exchange. They account for approximately one fifth of the capitalization of the exchange. It is the second largest exchange of India in terms of volume and first in terms of shares listed. The BSE Sensex has more than ten thousand shares listed.[1]

Weighting
The index is calculated based on a free-float capitalization method; a variation of the market cap method. Instead of using a company's outstanding shares it uses its float, or shares that are readily available for trading. The free-float method, therefore, does not include restricted stocks, such as those held by company insiders. The Free float Adjustment factor, or FAF for short, represents the proportion of shares that is freefloated as a percentage of issued shares and then its rounded up to the nearest mulitple of 5% for calculation purposes. To find the free-float capitalization of a company, first find its market cap (number of outstanding shares x share price) then multiply its free-float factor. The free-float factor is determined by the percentage of floated shares to outstanding. For example, if a company has a float of 4 million shares and outstanding shares of 5 million, the percent of float to outstanding is 80%. A company with an 80% free float falls in the 75-80% free-float factor, or 0.80, which is then multiplied by its market cap. For example: $120 million (12 million shares at $10/share) x 0.80 = $96 million.[

Nikkei 225 Stock Index maps companies on the Tokyo Stock Exchange (TSE). It is the oldest and the most well known Asian index in the world. The Nihon Keizai Shimbun (Nikkei) newspaper has been commisioned to officially calculate this index since 1971. The Nikkei 225 began to be calculated on September 7, 1950, retroactively calculated back to May 16, 1949. Currently. the Nikkei is used as the major indicator for the Japanese economy, similar to the Dow Jones Industrial Average (.DJIA). In fact, it was known as the "Nikkei Dow Jones Stock Average" from 1975 to 1985.[1]. However, unlike the Dow Jones, as the Nikkei 225 is designed to reflect the overall market, there is no specific weighting of industries. Stock splits, removals and additions of constituents impact upon the effective weighting of individual stocks and the divisor.[2]

Weighting and Components

The Nikkei is a price weighted average index (the unit is Yen), similar to the Dow Jones Index, based on a par value of 50 per share. That means, a 50 price change in any stock affects the average the same way, regardless of whether the stock is priced at 5 or 500 per share. The Nikkei 225 index's components are reviewed every year in September. Any changes, if required, are published in October and the index is adapted accordingly. To calculate an equal weighted index, the market capitalization for each stock used in the calculation of the index is redefined so that each index constituent has an equal weight in the index at each re-balancing date. In addition to being the product of the stock price, the stocks shares outstanding, and the stocks float factor and the exchange rate when applicable; a new adjustment factor is also introduced in the market capitalization calculation to establish equal weighting.

Stock Market Value= Price of shares * Number of shares outstanding * Free float factor * Exchange Rate(if applicable) * Adjustment Factor[3]

The Adjustment factor of a stock is assigned to the stock at each re-balancing date, which makes the stock value for each stock equal. For index component, the value would be:

Adjustment Factor= Index specific constant "Z"/(Number of shares of the stock*Adjusted stock market value before re-balancing)

The main criticism with this index is that a $5 priced share would have the same weight as the $200 priced share, which gives the smaller shares more weight than their due. Moreover, the stocks keep changing and so does the equality, so the stock has to be rebalanced from time to time[4] as compared to a cap weighted index.

Deutscher Aktien Index, or DAX 30 for short, is the blue chip market index for the Frankfurt Stock Exchange. It follows the top 30 german stocks on the electronic Xetra system that is used on the exchange.

Weighting and Calculation

The DAX indices are all calculated using capitalization weighted index using the total return Laspeyres index for calculations[1]. DAX Indices are weighted by shares.

The formula is:

Current index = Current total market cap of constituents Previous Value / Previous Period In comparison, the Shanghai SSE indices use the Paasche weighted composite price index formula[2]. This means that the index bases its calculations on its previous period for its calculations as compared to the Shanghai Composite Index, which bases it on the base period. The Base date for the index is 30 December, 1987 and it was started from a base value of 1,000. The Xetra system calculates the index after every 1 minute.[3] For more information, go to how stock indices work

Selection
The index sample of the DAX is selected according to the following six criteria[4]:

generally a company needs to be listed for at least three years prior to the inclusion of its stock in the DAX; the free-floating capital must at least reach 15%; turnover; market capitalization; availability of early opening prices, and branch representativeness for the German economy.

SINGAPOE: The Straits Times Index (also called the STI) is the benchmark index for the Singapore Exchange. It covers 30 companies which are deemed representative of the Singapore market. The Singapore Exchange works with the UK Based Financial Times Stock Exchange 100 Index (UKX-LN) in order to maintain the FTSE ST Index Series. [1]

GERMANY:

Bovespa Index (IBovespa) is the main indicator of the average performance of the BM&FBovespa exchange. The IBovespa covers more than 80% of the trades and approximately 70% of the market capitalization of the exchange[1].

Calculations and Weighting

The IBovespa uses the Negotiability index to calculate the criteria and weighting of the stocks on the index. The Negotiability Index helps us understand the representation of the stock in the cash market on the exchange, which allows us to ascertain the participation of every component of the IBovespa. This is similar to the Free float method used by various indices using the market capitalization method for calculating the index level.

[2] Negotiabiliy Index = o ni = number of trades carried out for stock "i" o vi = value created from the trades of stock "i" o N = Total number of trades on the BM&F Bovespa o V = Total value created by the N number of trades in the BM&F Bovespa

Composition
Criteria for Inclusion in the Portfolio

The Ibovespa is composed by the stocks that must meet the criteria as stipulated by the exchange[3]:

They should have been traded on the exchange in the past twelve months. To be included in the group of stocks whose negotiability indexes added represent 80% of the total value of all individual negotiability indexes. The trading share of the stock should be higher than 0,1% of the total share flow in the exchange. More than 80% of the shares of the stock must be traded on the exchange.

What are indices?

Indices allow investors to gain an insight into the performance of an asset class or a segment of that asset class. Indices are used as the underlying for various financial instruments and to benchmark the performance of portfolios designed to replicate the performance of a given asset class.

Why trade indices?

By trading index futures, options, warrants, CFDs, and index tracking Exchange Traded Funds (ETFs) an investor could gain exposure to the performance of the index or hedge an existing portfolio.