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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 s hares outstanding. As outstanding stock is bought and sold in public markets, ca pitalization 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 sh ares 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 trad ed companies in the world was US$51.2 trillion in January 2007[2] and rose as hi gh as US$57.5 trillion in May 2008[3] before dropping below US$50 trillion in Au gust 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 discov ery), 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, provi ding a total value for the company's shares outstanding. Market capitalization is the total dollar market value of all of a company's out standing shares. Market capitalization is calculated by multiplying a company's shares outstanding by the current market price of one share. The investment comm unity uses this figure to determine a company's size, as opposed to sales or tot al 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, S ensex, 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 m easure of "float" i.e., share value times an equity aggregate, with free and pub lic being others. Note that market capitalization is based on a market estimate of a company's val ue, based on perceived future prospects, economic and monetary conditions. Stock prices can also be moved by speculation about changes in expectations about pro fits or about mergers and acquisitions. It is possible for stock markets to get caught up in an economic bubble, like th e 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 es tate. In such events, valuations rise disproportionately to what many people wou ld consider the fundamental value of the assets in question. In the case of stoc ks, this pushes up market capitalization in what might be called an "artificial" manner. Market capitalization is, therefore, only a rough measure of the true s ize of a market. However, it does represent the best estimate of all market part icipants at any point in time bubbles are easy to spot retrospectively, but if a m arket participant believes a stock is overvalued, then of course they can profit from this by selling the stock (or shorting it, if they don't hold it). The formula for market capitalization is:

Market Capitalization = Current Stock Price x Shares Outstanding It is important to note that market capitalization (sometimes called "market cap ") is not the same as equity value, nor is it equal to a company's debt plus its shareholders' equity (although that is sometimes referred to as simply the comp any's capitalization). Let's assume Company XYZ has 10,000,000 shares outstanding and the current share price is $9. Based on this information and the formula above, we can calculate that Company XYZ's market capitalization is 10,000,000 x $9 = $90 million.

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