A market capitalization-weighted index obtains the current market value of each stock by:

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A market capitalization-weighted index calculates the current market value of each stock by multiplying the market price of each stock by the number of shares outstanding. This method ensures that bigger companies have a greater impact on the overall performance of the index, while smaller companies have a smaller impact. Using the closing market price (A) or daily volume (C) would not accurately reflect the market value of each stock, and dividing earnings by shares outstanding (D) would not be relevant to calculating market capitalization.

A Market Capitalization-Weighted Index Obtains the Current Market Value of Each