Why is this so important to adjust for? What the logic behind this?
stocks cloely held and not available for trading, I guess
reflects true liquidity and investable market cap.
- Adjustment to index: Neceessary to ensure proper weighting of component securities such that they are reflective of proportion of stock publically traded. Balance Gov’t held, for example. 2. Rebalancing of Portfolio. Necessary to keep potfolio alligned with index, to minimise tracking error.
closely held stock in practicaly not investable. One of benchmark properties is investability. V.