What is the FTSE 100 Index and how does it works?

FTSE 100 Index , Share Price, Companies

A share index of the 100 companies listed on the London Stock Exchange with the highest market capitalization, known as the Financial Times Stock Exchange 100 Index, or Footsie.

The FTSE 100 index is determined by a number of factors which influence not only which companies make up the index, but also how they affect the overall performance of the index as well. 

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What are the criteria used to determine if a company should be included in the FTSE 100 Index?

In order to be considered for the FTSE 100 Companies, a company must meet certain criteria. The company must be listed on the London Stock Exchange, and must meet the minimum liquidity requirements of the index.

The company would also need to be among the top 100 companies on the London Stock Exchange in terms of market capitalization. The market capitalization of a company is calculated by multiplying its share price by its outstanding shares.

FTSE 100 companies are viewed as 'large cap' companies.

When companies promote or demote in FTSE 100 Index ?

As market cap changes over time, so does the composition of the Footsie, as market cap changes over time. An index undergoes a quarterly review, just like a team in the Premier League would be promoted or relegated according to its performance.

It is taking place between the FTSE 100 and the FTSE 250, a grouping on the London Stock Exchange of the next 250 largest companies by market capitalization below the FTSE 100.

Companies can be demoted only if their market capitalization falls below 110, not 100. Similarly, FTSE 250 companies need to be ranked 90 or higher to be promoted to FTSE 100 Index. In order to avoid excessive turnover at the bottom of the index, a buffer zone has been established.

How much is FTSE 100 share price for one stock?

The FTSE 100 doesn't have a 'share price' in currency. Points are measured by the overall performance of its components. As an example, you might say that a certain amount of points have risen or fallen on the Footsie in a given period of time.

As a matter of fact, it is also important to remember that at any given time in the future the FTSE 100's value will not represent the total share price of all its components put together.