Float Adjusted Indexes

Can someone please in a nutshell explain float-adjusted indexes. I’m doing reading 34 right now and it’s all about float-adjusted indexes but never really provides a explanation of what they are. I’m guess I just zoned out in the previous reading when this was discussed? Any help is appreciated!

The indexes which considers market capatalization of company stocks as they are available for trading. Closely held shares and illiquid stocks are removed from counting as these shares are not available for buy and sell.

also cross holding of shares among firms is adjusted when alculating the free float.

Float adjustment basically means you are adjusting the total number of shares to take into account cross holdings of companies and shares that are not available to investors in the market. In other words, you take ONLY the number of shares that are available, i.e. the shares currently floating shares in the market. That’s pretty much it I guess…

In a lot of international countries, companies hold a number of shares in other companies… governments may also own shares in these companies… float adjustment basically excludes those shares, and only looks at the shares that can be traded on an exchange…