Sunday, December 26, 2010

Small-cap Stocks

Small-cap Stocks are basically companies with a small market capitalization. Market capitalization is the number of shares outstanding multiplied by the current market price of those shares. The general rule of thumb is that a company with a market capitalisation lower than one billion dollars is a small-cap. There are some funds set up that operate only in the smaller end of stock markets, called small-cap funds. Small-cap stocks can yield above average returns due to them having larger growth potential, e.g. a small cap could one day become a large cap; but on the converse they may also have higher business risk.

Synonyms: Small caps, Small companies, Market cap, Nano cap, micro cap

If you have any questions, or disagree with the definition, or if you have anything to add then please do add your comments in the box below.

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