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

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