What is market capitalization?

In Finance, the market capitalization of the company refers to its total value, measured according to its shares. Market capitalization or simply the market limit is equal to one shares of shares, multiplied by the number of existing shares. For example, if XYZ has 15 million shares of shares, each of which is worth $ 7.50 in the US (USD) per share, then market capitalization XYZ is $ 112.5 million. Investors use this value as one way to determine the value of the company. Of course, this value varies from day to day and from the moment to the moment during the trade hours, how the stock price changes.

Most of the time, market capitalization is divided into three wide categories. The company "Velká Caps" is a market ceiling anywhere from $ 10 billion to $ 200 billion. Central Caps are those with $ 2 to $ 10 billion, and those that trade as a whole between $ 300 million and USD $ 2 billion are to a small range of ceilings.

Sometimes another category is neededIE, such as "Mega Cap" for those rare companies with more than $ 200 billion. At the other end of the spectrum, the concept of “Micro Cap” describes corporations with a value of $ 300 million and Nano CAP has the least than $ 50 million. Cap companies and Nano Caps are often those whose shares are relatively unregulated because it is worth so little and are not known.

While the ranges described above and definitions are generally agreed, they can also be somewhat stretched, partly because the market capitalization of each publicly traded company is constantly change. Inflation and long -term historical ascending trend of shares prices lead to the need for definitions of market ceilings, which are to be updated so often. Individual countries also have their own ideas about what is a large or small market capitalization.

It is common for mutual funds and other institutional investors to be limited to companies in one series of market capitalization. For example, a mutual fund with mIt can sell as a small fund for the ceiling and others as a fund with large cap. Funds do this in an effort to use different attributes that have different market ceiling levels. The large caps fund can be considered stable because the companies that make up are probably older, reliable household names with good reputation. On the other hand, the fund with predominantly small holds of caps can try to stand up for growth because its society ideally increases value.

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