The FTSE MIB is the main stock market index of the Borsa Italiana in Italy. It was created to provide an accurate representation of the 40 most important and liquid companies listed on the Italian stock market in Milan.

This index reflects the performance of the Italian market and is weighted by market capitalization. This means that companies with a higher market capitalization have a greater influence on the index.

Most of the FTSE MIB companies offer dividends, and among the most recognized are Eni, Fiat Chrysler Automobiles, Intesa Sanpaolo, and UniCredit.

How is the FTSE MIB value calculated?

To determine the daily value of the FTSE MIB stock index, the following mathematical formula is used, which is based on the capitalization of its component companies:

FTSE MIB(t) = FTSE MIB(t - 1) × Σ Capi(t) / [ Σ Capi(t - 1) ± J ]

An adjustment coefficient J is included to mitigate the impact of financial transactions such as capital increases or reductions, and thus avoid abrupt changes in their value.

The value of the FTSE MIB on a given day is calculated by multiplying the value of the FTSE MIB on the previous day (day t-1) by a percentage obtained from the sum of the market capitalizations of the 40 companies on day t, divided by the sum of the capitalizations on day t-1.

The daily capitalization of a company is obtained by multiplying the number of its outstanding shares by the quoted price of those shares on that day.

For example, if the FTSE MIB closed today at 28,700 points and the total capitalization of the 40 companies is 500 billion euros, and tomorrow that capitalization rises to 505 billion euros, the closing value of the FTSE MIB on the following day would be:

FTSE MIB (specific day) = 28,700 × 505/500 = 28,871 basis points.