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22-537: The S&P/ASX 200 ( XJO ) index is a market-capitalisation weighted and float-adjusted stock market index of stocks listed on the Australian Securities Exchange . The index is maintained by Standard & Poor's and is considered the benchmark for Australian equity performance. It is based on the 200 largest ASX listed stocks, which together account for about 82% (as of March 2017) of Australia's share market capitalisation. The ASX 200

44-509: A float -adjusted weighting which makes their calculation more consistent with non-U.S. indices. An index may also be classified according to the method used to determine its price. In a price-weighted index such as the Dow Jones Industrial Average , the price of each component stock is the only consideration when determining the value of the index. Thus, price movement of even a single security will heavily influence

66-401: A Share market game as an educational tool with $ 50,000.00 AUD virtual cash. The ASX 200 is capitalisation-weighted , meaning a company's contribution to the index is relative to its total market value i.e., share price multiplied by the number of tradeable shares. The ASX 200 is also float adjusted , meaning the absolute numerical contribution to the index is relative to the stock's value at

88-406: A business at that scale, and the company must show that it has a working capital for at least 12 months. Moreover, once the company is listed, the business must be independent from any shareholder with controlling interest (anyone owning more than 30% of the company shares), and after the company is listed, at least 25% of its shares must be in the hands of the general public, that is public float, and

110-449: A company are also very complex. For example, in the UK, in order to run a public limited company , a register of the directors, shareholders, and any shareholder votes, as well as all details of the company's finances must be compiled and kept for a minimum of six years. Along with this, a comprehensive accounting record is also needed like sales and whom they are made to (until and unless it is

132-428: A company may have 10 million outstanding shares, with 3 million of them in a locked-in position; this company's float would be 7 million (multiplied by the share price). Stocks with smaller floats tend to be more volatile than those with larger floats. In general, the large holdings of founding shareholders, corporate cross-holdings, and government holdings in partially privatized companies are excluded when calculating

154-400: A company to perform. Whenever the general public, as company shareholders, demand dividends without keeping the company's economic circumstances in proper perspective, it increases performance pressure on the company. Secondly, sometimes companies provide false financial reports to sell shares which lead towards further complications in market. In 2005, AIG had to pay a fine of $ 1.7 billion as

176-466: A result of improper accounting. Additionally, Lehman Brothers went bankrupt in 2008 after using a small firm to secretly manipulate its balance sheets. Both cases illustrate that, as a result of pressure to sell shares, companies may manipulate their financial statements, and later face the consequences (Lehman Brothers' bankruptcy in 2008, AIG's bailout by the U.S. government in 2008). Less public float may cause illiquidity of stocks of companies due to

198-412: A retail business), purchases and from whom they are supplied, stock and debts – all of them are necessary to be provided. Along with all these costs, taxes are also to be paid while a company is public floating. For instance, in the UK a company has to pay corporation tax which is 20% if the profit per year is £300,000 or less and 21% if profit is above £300,000. Public floating also increases pressure on

220-417: Is sometimes seen as a better way of calculating market capitalization , because it provides a more accurate reflection (than entire market capitalization) of what public investors consider the company to be worth. In this context, the float may refer to all the shares outstanding that can be publicly traded. The float is calculated by subtracting the locked-in shares from outstanding shares. For example,

242-595: The S&;P 500 index is both cap-weighted and float-adjusted. Historically, in the United States, capitalization-weighted indices tended to use full weighting, i.e., all outstanding shares were included, while float-weighted indexing has been the norm in other countries, perhaps because of large cross-holdings or government ownership. More recently, many of the U.S. indices, such as the S&;P 500, have been changed to

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264-438: The 2008 financial crisis, several companies went bankrupt because of fluctuations in the stock market, severely limiting their operating capital to the extent that they were unable to pay their creditors and were forced to liquidate their operational assets. Costs of company registration are also very high making it difficult for certain small businesses to float shares. Along with higher costs, processes of registering and running

286-561: The Divisor is adjusted so that the ASX 200 index value does not change. The ASX 200 (ticker symbol AP) is traded on the ASX 24 exchange (SFE) with a contract size of 25 x S&P/ASX Index Points. To be eligible for inclusion in the ASX 200 Index: The number of companies in the index is dynamic and does not always amount to exactly 200. On average, the index is rebalanced every quarter by Standard & Poor's. As of 27 February 2022,

308-424: The company must have a total market capitalization of not less than £700,000. By offering a public float, companies gain access to new and large capital, as the general public can invest in the company. This new capital is then used to increase the company's profits. By public floating, a company gains access to interest-free capital as there is no interest to be paid on shares. Though a dividend may be involved,

330-470: The component. Stock market indices are a type of economic index . A common version of capitalization weighting is the free-float weighting. With this method a float factor is assigned to each stock to account for the proportion of outstanding shares that are held by the general public, as opposed to "closely held" shares owned by the government, royalty, or company insiders (see float ). For example, if for some stock 15% of shares are closely held, and

352-554: The constituent stocks of the ASX 200 in alphabetical order by symbol are MFG MTS QAN Capitalization-weighted index For example, the NYSE Amex Composite Index (XAX) is composed of all of the securities traded on the exchange including stocks and American depositary receipts (ADRs). The weighting of each component shifts with changes to each securities' price and the number of shares outstanding. The index moves in line with changes in price of

374-457: The float of the stock. Although the calculation starts with a sum of the market capitalisation of the constituent stocks, it is intended to reflect changes in share price, not market capitalisation. Therefore, a fudge factor called the "Divisor" is used to ensure that the index value only changes when stock prices change, not whenever market capitalisation changes. For example, if a company increases its market capitalisation by issuing new shares,

396-447: The other 85% are publicly held, the float factor will be 0.85, by which the company's market capitalization will be multiplied before weighting its value against the rest of the index. In other words, the number of shares used for calculation is the number of shares "floating", rather than outstanding. An index that is weighted in this manner is said to be "float-adjusted" or "float-weighted", in addition to being cap-weighted. For example,

418-584: The size of a public float. There are certain regulations to offer public floats, though these regulations might differ from region to region. For instance, to offer public floats in the United Kingdom, a company must be incorporated, i.e. be a public limited company under UK law. Also, the company should have published or filed audit accounts for at least a three-year period, have trading and revenue earning records for at least three years, its higher management and directors must be competent enough to run

440-740: The terms of dividend liability are far more flexible than terms for loans. Along with this, shares are not considered as a debt, and by public floating, companies can reduce their debts creating a better asset to liability ratio. By public floating, companies can enhance their credit image. As banks and other credit providing institutions provide credit, more often to a public limited company along with this, sometimes favorable terms are also offered by credit providers because of public limited company status. Along with enhanced credibility, companies can also get higher media coverage and attention of general public. By public floating, companies are vulnerable to threats of speculations and market fluctuations. During

462-528: The value of the index even though the dollar shift is less significant in a relatively high-value name. In a fundamentally weighted index, stocks are weighted by fundamental factors like sales or book value. Public float In the context of stock markets , the public float or free float represents the portion of shares of a corporation that are in the hands of public investors as opposed to locked-in shares held by promoters, company officers, controlling-interest investors, or governments. This number

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484-552: Was started on 31 March 2000 with a value of 3133.3, equal to the value of the All Ordinaries at that date. The ASX 200 reached 6,000 points for the first time on Thursday 15 February 2007. On 22 December 2017, the ASX 200 was 6,069. The ASX 200 crossed the 7,000 points level for the first time on 16 January 2020. Bloomberg , CNBC , Yahoo! Finance and Wikinvest use respectively the symbols AS51 .AXJO ^AXJO and AXJO to refer to this index. The ASX 200 webpage offers

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