Which shares are excluded from free float?

Which shares are excluded from free float?

• A. Shares held by management
• B. Restricted shares and shares held by families and government
• C. All outstanding shares
• D. Shares held as treasury stock

Answer: (B)

Free float is the portion of a company's shares that can be traded freely by the public in the open market. It excludes shares that aren’t readily tradable due to restrictions or because they’re owned by insiders or the government. Restricted shares can’t be traded freely until vesting or other conditions are met, and holdings by families or government are not available to public investors. Treasury stock is also not in the float since the company holds those shares and they aren’t circulating in the market. Therefore, the items that are excluded from free float are restricted shares and shares held by families and government, which matches the correct choice.

Free float is the portion of a company's shares that can be traded freely by the public in the open market. It excludes shares that aren’t readily tradable due to restrictions or because they’re owned by insiders or the government. Restricted shares can’t be traded freely until vesting or other conditions are met, and holdings by families or government are not available to public investors. Treasury stock is also not in the float since the company holds those shares and they aren’t circulating in the market. Therefore, the items that are excluded from free float are restricted shares and shares held by families and government, which matches the correct choice.