Tuesday, May 16, 2006

Market cap (or market capitalization)

Market cap is a cap that you can buy for S$5 at a pasa malam market.

Ok, just kidding lah, don't choke and fall off the chair, PC chairs with rollers are getting less robust these days. Below is the real definition.

Market capitalization (a.k.a. market cap) is simply the share price x the no. of outstanding shares that the company has issued. It is a measure of the "perceived" value of the company. To paraphase, market cap is what the participants in the stock market thinks how much a company is worth, it may or may not reflect its true value, or the intrinsic value of the firm.

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