What is Market Capitalization ?? (or) 3 Market Caps ?? Explained
Market Capitalization refers to the total number of outstanding shares of a company in the market multiplied by the current price of each share.It is a measure of the estimated valuation of a company.
Market capitalization is the valuation of the company based on its current share price and the total number of outstanding stocks. It is calculated by multiplying the current market price of the company’s share with the total outstanding shares of the company.
Market capitalization is one of the most important characteristics that helps the investor determine the returns and the risk in the share. It also helps the investors choose the stock that can meet their risk and diversification criteria
To make things simpler, let us consider the meaning of market capitalization with the help of an example.
For Example, that (TheFactsGENIE) Company has 20,000 outstanding shares in the market and each share of (TheFactsGENIE) Company is priced at Rs 20.
Then, the Market Capitalization of (TheFactsGENIE) Company will be calculated as follows Outstanding shares x price per share
20,000 x 20 = Rs 4,00,000
Therefore, the market capitalization of (TheFactsGENIE) Company is Rs 4,00,000.
The companies that are traded on the stock exchanges can be categorized into three broad categories