New answers tagged arbitrage
When a person (or group) owns a large block of stock the FFF is going to be less than 1.0. For example if Mr. Bill Gates owns 20% of MSFT, the FFF for MSFT is going to be 0.8. The weighting is based on FFF times the value of shares outstanding. So because MSFT has such a large market capitalization (shares * price) it has a bigger weight that ACME, a ...
You need to read up on how the FTSE is calculated. See this link: http://www.ftse.com/Indices/UK_Indices/Downloads/uk_calculation.pdf. It involves the market value of companies, not simply a weighted price average. There is a detailed example in the document I linked, which happens to be the very first Google result for "ftse index calculation".
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