#+title: Definitions

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* Links
- [[./../mba-main.org][TOC | Business]]

* Notes

** Market Capitalization (Market Cap)

Market capitalization (market cap) refers to the total value of a company's outstanding shares of stock. It is used as a measure of a company’s size and worth in the stock market.

*** Formula:
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Market Cap = Stock Price × Total Outstanding Shares
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*** Example:
If a company has 10 million shares and each share is worth $50, the market cap would be:

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10,000,000 × 50 = 500,000,000
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So, the company's market cap is **$500 million**.

*** Market Cap Categories:
- *Small-cap:* Less than **$2 billion** (e.g., early-stage or high-growth companies)
- *Mid-cap:* Between **$2 billion - $10 billion** (e.g., growing businesses)
- *Large-cap:* Over **$10 billion** (e.g., well-established companies like Apple, Microsoft)

*** Why is Market Cap Important?
- **Indicates company size** – Larger companies tend to be more stable, while smaller ones might have higher growth potential.
- **Affects investment decisions** – Large-cap stocks are often safer but may grow slower, while small-cap stocks can be more volatile but have higher growth potential.
- **Used in stock indices** – Major indices like the **S&P 500** are weighted by market cap.

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