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Large Cap (Big Cap)

What does 'Large Cap - Big Cap' mean

Large cap (sometimes "big cap") refers to a company with a market capitalization value of more than $10 billion. Large cap is a shortened version of the term "large market capitalization." Market capitalization is calculated by multiplying the number of a company's shares outstanding by its stock price per share. The dollar amounts used for the classifications "large cap," mid cap" or "small cap" are only approximations that change over time.

Explaining 'Large Cap - Big Cap'

Investors like to diversify their portfolios by investing in companies in different industries and at varying levels of assets, revenue and market size. A company's share price tells you little about how big it is. A company with a market price of $100 can be much smaller than a company with a market price of $10 depending on the number of shares it has outstanding in the market.

Market Capitalization Calculation

Market capitalization is calculated by multiplying the number of shares outstanding by the share price of the company's stock. The number of shares outstanding is reported on a quarterly basis, but the price of the stock can change from minute to minute. The value of market capitalization is as fluid as the market price. For example, a company with 10 billion shares outstanding trading at a price of $10 per share has a market capitalization of $100 billion. Likewise, a company with 100 billion shares outstanding, and trading at a price of $1, also has a market capitalization of $100 billion.

Market Capitalization Categories

In general, stocks are lumped into three categories of capitalization: large cap, mid cap and small cap. A large-cap company has a market capitalization over $10 billion. A mid-cap company has a market capitalization between $2 billion and $10 billion, and a small-cap company has less than $2 billion in market capitalization. In general, small caps also have lower trading liquidity, less access to the capital markets and less experience, and there's less information available about small caps than large caps.


Further Reading


US stocks in the presence of oil price risk: Large cap vs. Small cap
dialnet.unirioja.es [PDF]
… This is however not surprising as companies categorised as large caps are big companies that could only grow slowly as they operate … Returns on small cap stocks are usually higher due to the abundant growth potential faced by companies categorized under this segment …

Financial Indices Modelling and Trading utilizing Deep Learning Techniques: The ATHENS SE FTSE/ASE Large Cap Use CaseFinancial Indices Modelling and Trading utilizing Deep Learning Techniques: The ATHENS SE FTSE/ASE Large Cap Use Case
ieeexplore.ieee.org [PDF]
… This is however not surprising as companies categorised as large caps are big companies that could only grow slowly as they operate … Returns on small cap stocks are usually higher due to the abundant growth potential faced by companies categorized under this segment …

Commentary—The economic and statistical significance of stock returns on customer satisfactionCommentary—The economic and statistical significance of stock returns on customer satisfaction
pubsonline.informs.org [PDF]
… This is however not surprising as companies categorised as large caps are big companies that could only grow slowly as they operate … Returns on small cap stocks are usually higher due to the abundant growth potential faced by companies categorized under this segment …

Small cap and value investing offer both high returns and a hedgeSmall cap and value investing offer both high returns and a hedge
jwm.pm-research.com [PDF]
… This is however not surprising as companies categorised as large caps are big companies that could only grow slowly as they operate … Returns on small cap stocks are usually higher due to the abundant growth potential faced by companies categorized under this segment …

The joint dynamics of liquidity, returns, and volatility across small and large firmsThe joint dynamics of liquidity, returns, and volatility across small and large firms
www.econstor.eu [PDF]
… This is however not surprising as companies categorised as large caps are big companies that could only grow slowly as they operate … Returns on small cap stocks are usually higher due to the abundant growth potential faced by companies categorized under this segment …

Real estate risk exposure of equity real estate investment trustsReal estate risk exposure of equity real estate investment trusts
link.springer.com [PDF]
… This is however not surprising as companies categorised as large caps are big companies that could only grow slowly as they operate … Returns on small cap stocks are usually higher due to the abundant growth potential faced by companies categorized under this segment …

… return relationship: An empirical study of different statistical methods for estimating the Capital Asset Pricing Models (CAPM) and the Fama-French model for large cap …… return relationship: An empirical study of different statistical methods for estimating the Capital Asset Pricing Models (CAPM) and the Fama-French model for large cap …
arxiv.org [PDF]
… This is however not surprising as companies categorised as large caps are big companies that could only grow slowly as they operate … Returns on small cap stocks are usually higher due to the abundant growth potential faced by companies categorized under this segment …

Overreaction evidence from large-cap stocksOverreaction evidence from large-cap stocks
www.emerald.com [PDF]
… This is however not surprising as companies categorised as large caps are big companies that could only grow slowly as they operate … Returns on small cap stocks are usually higher due to the abundant growth potential faced by companies categorized under this segment …



Q&A About Large Cap (Big Cap)


How is market capitalization calculated?

Market capitalization is calculated by multiplying the number of shares outstanding by its stock price per share.

Why do investors like to diversify their portfolios by investing in companies in different industries and at varying levels of assets, revenue and market size?

Investors like to diversify their portfolios because they believe it will help them avoid risk associated with putting all their money into one company or industry. Diversification also helps spread out your investment over time so that you are not putting all your money into securities that could be affected by changes in interest rates or other factors affecting only one sector or industry.

What does market capitalization represent for investors?

Market capitalization represents total dollar value invested in stocks traded on public exchanges such as NASDAQ and NYSE . It also represents total dollar value invested in stocks traded on private exchanges such

How can you estimate how big a company is based on its share price alone?

You can't estimate how big a company is based on its share price alone; however, if you know the number of shares outstanding, then you can calculate what percentage each individual investor owns when he buys stock from another investor who has sold his shares (or vice versa). This calculation will give an approximation as to whether this particular stock represents a small portion or large portion of an individual's portfolio.

What is the definition of large cap?

Large cap refers to a company with a market capitalization value of more than 1 billion.

What does "large" refer to in large cap?

The term "large" refers to the size of the company's market capitalization.

What does share price tell you about how big a company is?

A company's share price tells you little about how big it is.