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Just like gamblers place bets on boxers who fight in divisions based on their weight, investors, too, put their money down on stocks that are grouped together by size. All publicly traded companies...
Market cap is given by the formula =, where MC is the market capitalization, N is the number of common shares outstanding, and P is the market price per common share. [ 8 ] For example, if a company has 4 million common shares outstanding and the closing price per share is $20, its market capitalization is then $80 million.
Large-cap stocks are generally considered to be safer investments than their mid- and small-cap stock counterparts because they are larger, more established companies with a proven track record.
In the United States, a small cap company is a company whose market capitalization (shares x value of each share) is considered small, from $250 million to $2 billion. Market caps terms may be different outside the United States.
Small Cap vs. Large Cap: Some investors use the size of a company as the basis for investing. Studies of stock returns going back to 1925 [ citation needed ] have suggested that "smaller is better," and on average, the highest returns have come from stocks with the lowest market capitalization , the so-called " Size premium ".
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The Russell Midcap Index is a stock market index that measures performance of the 800 smallest companies (approximately 27% of total capitalization) in the Russell 1000 Index.
Small-cap stocks may have finally turned the corner last quarter, but the rally may be just getting started. The benchmark small-cap stock index, the Russell 2000, climbed 8.9% during the third ...