Search results
Results from the WOW.Com Content Network
Stock market indices may be categorized by their index weight methodology, or the rules on how stocks are allocated in the index, independent of its stock coverage. For example, the S&P 500 and the S&P 500 Equal Weight each cover the same group of stocks, but the S&P 500 is weighted by market capitalization, while the S&P 500 Equal Weight places equal weight on each constituent.
A capitalization-weighted (or cap-weighted) index, also called a market-value-weighted index is a stock market index whose components are weighted according to the total market value of their outstanding shares. Every day an individual stock's price changes and thereby changes a stock index's value.
A passively managed fund is when investment securities are not chosen by a portfolio manager, and are automatically selected to match an index or part of the market. Until 15 years ago ...
Market capitalization, sometimes referred to as market cap, is the total value of a publicly traded company's outstanding common shares owned by stockholders. [2] Market capitalization is equal to the market price per common share multiplied by the number of common shares outstanding. [3] [4] [5]
Small-cap: Companies with a market capitalization between $300 million and $3 billion In the example above, Company A with a market cap of $10 billion could be considered a mid-cap.
Equal-weight ETFs limit the risk of a severe downfall in any particular security, providing a nice balance in the portfolio.
Both the cap-weighted market portfolio and the CAPM model are inefficient. If we assume that the capitalization-weighted market portfolio is not efficient, assuming a pricing inefficiency, capitalization-weighting might be sub-optimal and the degree of sub-performance might be proportional to the degree of random noise. [3] [10] [11]
The difference between the full capitalization, float-adjusted, and equal weight versions is in how the index components are weighted. The full cap index uses the total shares outstanding for each company. The float-adjusted index uses shares adjusted for free float. The equal-weighted index assigns each security in the index the same weight.