Understanding Market Capitalization and Its Importance

*Understanding Market Capitalization and Its Importance*

Market capitalization, often called market cap, is the total value of a company’s outstanding shares of stock. It’s calculated by multiplying the current share price by the total number of shares. Market cap helps investors gauge a company’s size, financial stability, and growth potential.

Large-cap companies tend to be more stable with steady returns, while small-cap companies may offer higher growth but come with more risk. Understanding market capitalization is crucial for building a balanced investment portfolio and making informed decisions in the stock market.