Market Capitalisation
Market cap is the total market value of a company's outstanding shares.
Market capitalisation is calculated by multiplying the share price by the number of shares outstanding. It is the standard measure of a company's size in equity markets and determines index membership for indices like the S&P 500 and FTSE 100.
Companies are loosely grouped by market cap: large-cap (typically above $10bn), mid-cap, and small-cap. Larger companies tend to be more liquid and less volatile, while smaller companies historically offer higher growth potential with higher risk.
Example
A company with 2 billion shares trading at $150 each has a market cap of $300bn.
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