Capitalization weighting of stock indices means that the weight of a company in the index is related to:
A) the number of shares issued.
B) the size of equity capital relative to assets.
C) the total stock market value of the company.
D) the book value of the company's common equity.

Question

Quizplus · Accepted Answer

Capitalization weighting, also known as market-cap weighting, means that companies are weighted in the index based on their total market value, which is calculated by multiplying the stock price by the total number of shares outstanding.

Capitalization Weighting of Stock Indices Means That the Weight of a Company