Investing Answers Building and Protecting Your Wealth through Education Publisher of The Next Banks That Could Fail
Investing Answers Building and Protecting Your Wealth through Education Publisher of The Next Banks That Could Fail

Financial Times 100 Index (FTSE)

What it is:

The Financial Times 100 Index, or FTSE, is the most widely used benchmark for the performance of equities traded on the London Stock Exchange.

How it works (Example):

The index contains the 100 largest companies traded on the London Stock Exchange (based on market capitalization). These stocks represent about 80% of the value of all issues traded on the exchange. Because it is weighted by market cap, the index's largest component stocks have the greatest influence on the FTSE's value.

Because it is weighted by market cap, the index's largest component stocks have the greatest influence on the FTSE's value.

The FTSE 100 is calculated in real time and published every 15 seconds.

Why it Matters:

It is the most widely used United Kingdom stock market indicator, much like the DJIA is for the New York Stock Exchange.

The index is quite unusual in that it re-weights its component stocks daily to represent the actual state of the market. Meanwhile, the index is fully rebalanced (additions and subtractions) on a quarterly basis.