Calculation formulas

  • Paasche formula
    See WBI
  • Value index formula
    Most of the indices calculated by the Vienna Stock Exchange are based on the value index formula

Example I

Price index calculated using the value index formula - with a correction factor

Formel Preisindex mit Korrekturfaktor

New index = starting value × (current capitalization/starting capitalization) × adjustment factor

A new adjustment factor needs to be calculated only in the case of adjustments that result in a change in the index capitalization (e.g., expansion of the list of constituents).

 

Formel Korrekturfaktor

New adjustment factor = (old capitalization / new capitalization) × old adjustment factor

SymbolExplanation
NNumber of stocks included in the index
PiPrice of stock i in local currency
QiNumber of shares of stock i in the index
FFiFree float factor of stock i
RFiRepresentation factor of stock i
AFAdjustment factor
tTime of index calculation
t-1Time prior to the adjustment
t0Index start date

Example II

Price index calculated using the value index formula - with a divisor

Formel Preisindex mit Divisor

Index value = market capitalization / divisor

Formel Divisor

Divisor = market capitalization / index value

SymbolExplanation
NNumber of stocks included in the index
PiPrice of stock i in local currency
QiNumber of shares of stock i in the index
FFiFree float factor of stock i
RFiRepresentation factor of stock i
tTime of index calculation

What are stock market indices?

Definition
Index types
Types of weighting
Requirements for an index
Index classification criteria
Can I trade an index?

Index terms

Market & index capitalization
Free float factor (FFF)
Representation factor (RF)
Adjustment factor
Divisor
Stock split
Fast entry/fast exit

Index changes

Regular adjustments
25/25 rule
Extraordinary adjustment
Overview adjustments
Stock splits & reverse stock splits
Increase in the number of shares