Market capitalization measures a company's total value in the stock market. It is calculated by multiplying its share price by the number of outstanding shares.
Small-cap stocks represent companies with smaller market values. They offer high growth potential but come with higher risks due to market volatility.
Mid-cap stocks are mid-sized companies known for their growth potential and relatively lower risk compared to small-cap stocks.
Large-cap stocks are well-established, stable companies with a proven track record. They are less volatile and ideal for long-term investments.
Small-cap stocks often deliver higher returns during bull markets but may struggle in volatile or bear markets.
Mid-cap stocks strike a balance between the high returns of small-caps and the stability of large-caps, making them attractive for diversified portfolios.
Large-cap stocks offer steady performance, regular dividends, and lower risk, making them suitable for conservative investors.
The primary differences lie in market value, risk levels, and growth potential, helping investors choose based on their goals.
Understanding market capitalization helps investors assess the size, growth prospects, and risks associated with a company, guiding smarter investment decisions.