How do you calculate divisor for index? - Answers

To calculate the divisor for an index, you typically take the total market capitalization of the index's constituent securities and divide it by a base value. This base value is often set to normalize the index level at the time of its creation. The divisor is adjusted for corporate actions like stock splits, dividends, or mergers to ensure continuity in the index's value over time. By using this approach, the index reflects the performance of the underlying securities accurately.