Question:
Stock A has 10 million shares issued and Stock B has 5 million shares issued. What is their relative weighting if both stocks are represented in the S&P 500?
Equal-weightings, like all S&P 500 stocks.
B has twice the weighting, to account for having fewer shares.
A has twice the weighting, to account for having more shares.
They are weighted according to their expected performance
Answer:
I believe they are weighted based on the market capitalization of the company versus the entire S&P. If Company A has 10 million shares and a price of $100, then it's market cap is $1 billion. If the sum of all S&P stock market caps is $1 trillion, then Company A would represent 0.1% of the S&P.
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