The BrambleTheBramble said:I'm still not so sure.
I've attached the rules for calculating the index which I pulled off the FTSE site.
If you look at rule 3.2 it mentions the divisor saying "the divisor is [then] adjusted when capitalisation amendments are made to the constituents of the index...".
Which is exactly (in your example) you were saying HADN'T occurred - no changes to cap.
So my original position still stands. If the divisor is only adjusted to "...allow the index to remain comparable over time" and no change to constituent market cap has occurred - it should be the same in the examples used above.
I've not looked at the document yet, but I think it is talking about the situation when a company in the index has a stock split or share issue. The FTSE Index is designed to track the value of companies in the index, and the divisor is used to adjust the index with the new constituents so it gives off the previous days closing prices the same index value as the old constituents had.
Sections 6.3.1 covers this (though on the subject of shares issues, where the index level should be unchanged due to changes in shares in issue.
In fact read 6.4.1 and that pretty much covers it
"When a company is added to or deleted from the index, the market capitalisation of that company is added to or deleted from the index and the total marker capitalisation will rise or fall accordingly. The index divisor is adjusted to maintain a constant index value."
It goes on to give an example.
You have to remember that the index shows the performance of the top 100 or so companies ranked by market capitalisation with rules in place for when stocks enter and leave the index. By definition higher market capitalisation stocks will replace lower cap stocks, but the index level is unchanged when the additions occur.