Market capitalization, commonly known as market cap, is the total value of a company's outstanding shares of stock. It is calculated by multiplying the current stock price by the total number of shares outstanding.
Companies are classified as large-cap (over $10 billion), mid-cap ($2-10 billion), and small-cap (under $2 billion). Large-cap companies are generally considered safer, while small-cap companies offer higher growth potential with greater risk.
Market capitalization helps investors understand the relative size of a company and make informed investment decisions based on their risk tolerance.