In a market-capitalization-weighted index, the weight of each constituent security is calculated by dividing its market capitalization (price per share multiplied by the number of shares outstanding) by the total market capitalization of all securities in the index. This method reflects the relative size of each company in the market.

• Option A (price-weighted): Incorrect because the weight is determined by the price of the security relative to the sum of all constituent prices, not by market capitalization.
• Option B (equal-weighted): Incorrect because each security is assigned an equal weight at inception, regardless of market capitalization.