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Investing

Market Capitalization

What is Market Capitalization?

The total market value of a company's outstanding shares.

Understanding Market Capitalization

Market cap is used to size companies: large-cap, mid-cap, and small-cap.

It reflects what the market thinks the equity is worth, not the company's book value.

Formula

Market cap=Share price×Shares outstanding\text{Market cap} = \text{Share price} \times \text{Shares outstanding}

Example

100 million shares at $50 each give a market cap of $5 billion.

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