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Floating shares are shares of a public corporation that are available for trading in a stock market.
The number of floating shares may be smaller than the company's outstanding shares if founding partners, other groups with a controlling interest, or the company's pension fund, employee stock ownership plan (ESOP), or similar programs hold shares in their portfolios that they aren't interested in selling.
Some equity index providers, including Standard & Poor's, use floating shares rather than outstanding shares in calculating their market-capitalization weighted indexes on the grounds that a float-adjusted index is a more accurate reflection of market value.
- Browse Related Terms: Analyst, Arithmetic index, Benchmark, Beta, Core earnings, Domini Social Index 400, Floating shares, Morgan Stanley Capital International Indexes, Standard & Poor's (S&P), Standard & Poor's 500 Index (S&P 500), Standard & Poor's/BARRA Growth and Value Indexes, Structured product