personal-finance
What is market capitalisation of stocks?
Jan 24, 05:01

Market capitalisation, also known as market cap, is one of the most effective ways of evaluating the value of a company. It is determined by totalling the price of outstanding shares of a company. Since the price of each share is determined by supply and demand in the open market, it helps an investor get a fair reading on the public sentiment towards the company's prospects.

Market cap helps an investor understand what stage of development a company is at. This along with understanding the value and risk associated with a company helps an investor distribute his or her capital to maximise returns and minimise risk.

categories of market cap