What is the FTSE 100?

The FTSE 100 is an index composed of the 100 largest companies listed on the London Stock
Exchange (LSE). These are often referred to as blue chip companies, and the index is seen
traditionally as a good indication of the performance of major companies listed in the UK.
The FTSE 100 gets its name from FTSE the company which calculates the index, and the
fact that it contains 100 companies. FTSE is actually FTSE Group, and is 50/50 owned by the
Financial Times and the London Stock Exchange (hence FTSE - FT and SE). Although the
FTSE 100 is the most famous index the company produces, FTSE Group also calculates over
100,000 other indices, covering markets around the world, every day.
In the UK market, the other FTSE UK indices include the FTSE 250 (the next 250 largest
companies after the FTSE 100) and the FTSE SmallCap (the companies smaller than those).
The FTSE 100 and FTSE 250 together make up the FTSE 350; add in the FTSE SmallCap
and you get the FTSE All-Share.
The FTSE 100 was launched on 3 January 1984 and had a start value of 1,000.0. Since then
the make-up of the index has changed almost beyond recognition with mergers, takeovers and
disappearing companies underlining the indexs purpose of acting as a barometer of market
activity. A fair number of constituents have changed their names too remember Midland
Bank (HSBC), Commercial Union Assurance (Aviva),Reckitt & Colman (Reckitt Benckiser)
and British Gas (now BG Group and Centrica).

Weighting
In the FTSE indices, share prices are weighted by market capitalisation, so that the larger
companies make more of a difference to the index than smaller companies. The basic formula
for these indices is:[5]

The Free float Adjustment factor represents the percentage of all issued shares that are
readily available for trading. The factor is then rounded up to the nearest multiple of 5%. To
find the free-float capitalisation of a company, first find its market cap (number of shares x
share price) then multiply by its free-float factor. Free-float capitalisation, therefore, does not
include restricted stocks, such as those held by company insiders.
The rapid boom in technology companies during the late 1990s pushed the FTSE 100 to its
all-time closing high on 30th December 1999, of 6930.2. The record closing low of the index
was on 12th July 1984 when it fell to 978.7.
The level of the FTSE 100 is calculated using the total market capitalisation of the constituent
companies, and the index value, to produces the single figure you see quoted. Because the
total market capitalisation is affected by the individual share prices of the companies, as share
prices change throughout the day, so the index value changes. When the FTSE 100 is up or
down the change is being quoted against the previous days close

Started in January 1984

Measures the total value of the top 100 companies
Companies promoted and relegated quarterly
Highest peak of 6950.6 on 30 December 1999
Lowest point of 3529.86 on 5 March 2007

FTSE 100 Index performance between 1985 and 2014.

Source: Financial Express.

Last
5 years. 2009-2014
Source: London stock exchange website

19 April 18 July 2014. Last 3 months.

Source: London stock exchange website

Effects on inflation?
Rising FTSE 100 indicates a rising average price level.

Recent news?
http://www.londonstockexchange.com/exchange/prices-andmarkets/stocks/indices/summary/summary-indicesnews.html?index=UKX&newsType=RNR