Weighting cap

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    The weighting cap is simply the upper limit that is applied to a company/data set within an index. For example in the (NASDAQ 100) if a company achieves a market cap of above 24% of the index, then it has to be rebalanced.

    Various equations are used to calculate the weighting of a stock market indices, such as price-weighted index and market-weighted index

    It is important to note with weighting caps, that while some indices impose a cap on the amount of weighting a company/stock can have, others do not.