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Market capitalization Market capitalization (or market cap) is the total value of the issued shares of a publicly traded company; it is equal to the share price times the number of shares outstanding. As outstanding stock is bought and sold in public markets, capitalization could be used as a proxy for the public opinion of a company's net worth and is a determining factor in some forms of stock valuation. Preferred shares are included in the calculation.[1] The total capitalization of stock markets or economic regions may be compared to other economic indicators. The total market capitalization of all publicly traded companies in the world was US$51.2 trillion in January 2007[2] and rose as high as US$57.5 trillion in May 2008[3] before dropping below US$50 trillion in August 2008 and slightly above US$40 trillion in September 2008.[3] Valuation Market capitalization represents the public consensus on the value of a company's equity. In a public corporation, ownership interest is freely bought and sold through purchases and sales of stock, providing a market mechanism (price discovery), which determines the price of the company's shares. Market capitalization is defined as the share price multiplied by the number of shares in issue, providing a total value for the company's shares outstanding. Market capitalization is the total dollar market value of all of a company's outstanding shares. Market capitalization is calculated by multiplying a company's shares outstanding by the current market price of one share. The investment community uses this figure to determine a company's size, as opposed to sales or total asset figures. If a company has 35 million shares outstanding, each with a market value of $100, the company's market capitalization is $3.5 billion (35,000,000 $100 per share). Many companies have a dominant shareholder, which may be a government entity, a family, or another corporation. Many stock market indices such as the S&P 500,Sensex, FTSE, DAX, Nikkei, Ibovespa, and MSCI adjust for these by calculating on a free float basis, i.e. the market capitalization that they use is the value of the publicly tradable part of the company. Thus, market capitalization is one measure of "float" i.e., share value times an equity aggregate, with free and public being others. Note that market capitalization is based on a market estimate of a company's value, based on perceived future prospects, economic and monetary conditions. Stock prices can also be moved by speculation about changes in expectations about profits or about mergers and acquisitions. It is possible for stock markets to get caught up in an economic bubble, like the steep rise in valuation of technology stocks in the late 1990s followed by the dot-com crash in 2000. Hype can affect any asset class, such as gold or real estate. In such events, valuations rise disproportionately to what many people would consider the fundamental value of the assets in question. In the case of stocks, this pushes up market capitalization in what might be called an "artificial" manner. Market

capitalization is, therefore, only a rough measure of the true size of a market. However, it does represent the best estimate of all market participants at any point in timebubbles are easy to spot retrospectively, but if a market participant believes a stock is overvalued, then of course they can profit from this by selling the stock (orshorting it, if they don't hold it). [edit]Categorization of companies by capitalization Traditionally, companies were divided into large-cap, mid-cap, and small-cap. The terms megacap and micro-cap have also since come into common use, andnano-cap is sometimes heard. [4] Different numbers are used by different indexes;[4][5] there is no official definition of, or full consensus agreement about, the exact cutoff values. The cutoffs may be defined as percentiles rather than in nominal dollars. The definitions expressed in nominal dollars need to be adjusted over the decades due to inflation, population change, and overall market valuation (for example, $1 billion was a large market cap in 1950, but it is not very large now), and they may be different for different countries. A rule of thumb may look like:

Mega-cap: Over $200 billion Large-cap: Over $10 billion Mid-cap: $2 billion$10 billion Small-cap: $250 million$2 billion Micro-cap: Below $250 million Nano-cap: Below $50 million

"Cap" is short for capitalization, a measure by which a company's size is classified. Big/Large caps are companies that have a market cap between $10200 billion dollars. Mid caps range from $2 billion to $10 billion dollars. Small caps are typically new or relatively young companies and have a market cap between $100 million to $1 billion dollars. SmallCap's track record is not as lengthy as that of the Mid to MegaCaps. SmallCaps present the possibility of greater capital appreciation, but at greater risk. Related measures Market cap reflects only the equity value of a company. It is important to note that a firm's choice of capital structure has a significant impact on how the total value of a company is allocated between equity and debt. A more comprehensive measure is enterprise value (EV), which includes debt, preferred stock, and other factors. Insurance firms use a value called the embedded value (EV). Definition of 'Mid Cap' A company with a market capitalization between $2 and $10 billion, which is calculated by multiplying the number of a company''''s shares outstanding by its stock price. Mid cap is an abbreviation for the term "middle capitalization".

Investopedia explains 'Mid Cap' As the name implies, a mid cap company is in the middle of the pack between large cap and small cap companies. Keep in mind that classifications such as large cap, mid cap and small cap are only approximations that change over time. Also, the exact definition of these terms can vary among the various participants in the investment business. Why Per-Share Price is Not Important Market Cap is the True Measure of a Company's Value By Ken Little, About.com Guide See More About:

stock market cap outstanding shares small cap stock mid cap stock large cap stock

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This question opens a point that often trips up beginning investors: The per-share price of a stock is thought to convey some sense of value relative to other stocks. Nothing could be farther from the truth. In fact, except for its use in some calculations, the per-share price is virtually meaningless to investors doing fundamental analysis. If you follow the technical analysis route to stock selection, its a different story, but for now lets stick with fundamental analysis. The reason we arent concerned with per-share price is that it is always changing and, since each company has a different number of outstanding shares, it doesnt give us a clue to the value of the company. For that number, we need the market capitalization or market cap number.

The market cap is found by multiplying the per-share price times the total number of outstanding shares. This number gives you the total value of the company or stated another way, what it would cost to buy the whole company on the open market. Heres an example: Stock price: $50 Outstanding shares: 50 million Market cap: $50 x 50,000,000 = $2.5 billion To prove our opening sentence, look at this second example: Stock price: $10 Outstanding shares: 300 million Market cap: $10 x 300,000,000 = $3 billion This is how you should look at these two companies for evaluation purposes. Their per-share prices tell you nothing by themselves. What does market cap tell you? First, it gives you a starting place for evaluation. When looking a stock, it should always be in a context. How does the company compare to others of a similar size in the same industry? The market generally classifies stocks into three categories: Small Cap under $1 billion Mid Cap $1 - $10 billion Large Cap $10 billion plus Some analysts use different numbers and others add micro caps and mega caps, however the important point is to understand the value of comparing companies of similar size during your evaluation.

You will also use market cap in your screens when looking for a certain size company to balance your portfolio. Conclusion Dont get hung up on the per-share price of a stock when making your evaluation. It really doesnt tell you much. Focus instead on the market cap to get a picture of the companys value in the market place.

What is meant by mid cap stock?

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Answer:
A mid cap stock refers to the stocks of a company that is considered mid-size as per its market capitalization. Market capitalization refers to the total market value of all the company's stocks put together. If it runs to a few hundreds/thousands of crores the company will be called large cap and if it only a few crores it is called a small cap. All companies that fall between these two are called mid cap companies.