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To calculate the index, each company's market capitalization is multiplied by its weighting factor. This factor takes into account the number of shares available for trading (also known as the free float). The free float is the portion of shares that are available to the public, excluding those held by company insiders or the government. By using the free float, the index accurately reflects the shares that are actually traded on the market. These weighted market capitalizations are then added together, and the sum is divided by a divisor. This divisor is a figure that was initially set when the index was launched and is adjusted over time to account for corporate actions like stock splits and dividend payments.
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