Originally Posted by figner
If a company goes under and S&P replaces it in the index with another company, does the price and yield of the index reflect the loss taken on the gone-under company?
Thanks for the replies - while searching around for the answer after I posted the above, I ran across this description of how the S&P indices are calculated. Most of the examples use the S&P 500:
To summarize, the answer to my question is "yes," as some of you already posted, but I like to look at references.
twaddle, I agree it's more likely a company will be dropped before it goes BK, so I guess I'm really more interested in how any loss/replacement is reflected in the index.