Company stock traded in the stock market can be categorized whether it is small, medium or large-cap company through its market capitalization. How do we determine the level of the company's market capitalization? Two words... "read below".
Market capitalization is simply defined to be the relative size of a company. This is determined by the formula: Number of shares issued X Price per share. Investopedia.com categorizes the types of capitalization into six(6);- Mega cap
- Big/Large cap
- Mid cap
- Small cap
- Micro cap
- Nano cap
Understanding the market cap is not just important if you're investing directly in stocks. It is also useful for mutual fund investors, as many funds will list the 'average' or 'median' market capitalization of its holdings. As the name suggests, this gives the middle ground of the fund's equity investments, letting investors know if the fund primarily invests in large-, mid- or small-cap stocks.
Read more: www.investopedia.com
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