The figure given below shows the demand curves [D 1 and D 2 ] and the supply curve [S 1 ] of capital.Figure 17.1

-Most stock indexes use which of the following measures to weight the companies that participate in the index?

Question

The figure given below shows the demand curves [D 1 and D 2 ] and the supply curve [S 1 ] of capital.Figure 17.1
 
-Most stock indexes use which of the following measures to weight the companies that participate in the index?

Quizplus · Accepted Answer

Most stock indexes use market capitalization to weight the companies that participate in the index. Market capitalization is calculated by multiplying the current stock price by the number of outstanding shares, and it reflects the total value of a company's outstanding equity. This measure is considered the most appropriate for determining the relative importance of each company in the index, as it takes into account both the company's size and its market valuation.

The Figure Given Below Shows the Demand Curves [D1 and D2]

The Figure Given Below Shows the Demand Curves [D₁ and D₂]