MARKET CAPITALIZATION Meaning and
Definition
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Market capitalization refers to the total value of a publicly traded company’s outstanding shares of stock in the market. It is a financial metric used to assess a company's size and worth. Market capitalization is calculated by multiplying the current market price of each share by the total number of outstanding shares.
Market capitalization allows investors, analysts, and financial institutions to gauge the public perception and assessment of a company. It provides a snapshot of how the investment community values a particular company at a given point in time.
Companies are typically categorized into three main groups based on their market capitalization: large-cap, mid-cap, and small-cap. Large-cap companies have high market capitalization, indicating that they are well-established and have a large market presence. Mid-cap companies are categorized as having a medium level of market capitalization, often with a potential for growth. Small-cap companies have a lower market capitalization, indicating that they are smaller, younger, and potentially higher-risk investments.
Market capitalization is valuable information for investors as it helps determine the overall size and risk of a company. It is often used in conjunction with other financial metrics to assess the investment potential of a company and compare it to other companies in the same industry or market. However, it is important to note that market capitalization does not take into account the company's debt or other financial obligations.
Common Misspellings for MARKET CAPITALIZATION
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Etymology of MARKET CAPITALIZATION
The word "market capitalization" is derived from two different terms: "market" and "capitalization".
The term "market" comes from the Latin word "mercatus", meaning "trade" or "marketplace". It signifies a place or system where goods or services are bought and sold.
The term "capitalization" is derived from the word "capital", which originates from the Latin word "capitalis", meaning "of the head" or "chief". In finance, "capital" refers to wealth in the form of money or assets that are used to generate income or invest.
When these two terms are combined, "market capitalization" refers to the total value or size of a company in the market. It represents the aggregate worth of a company's outstanding shares. The term is commonly used in finance to assess the relative size and value of public companies.
Similar spelling words for MARKET CAPITALIZATION
