As a result, investments in large-cap stocks may be considered more conservative than investments in small-cap or mid-cap stocks, potentially posing less risk in exchange for less aggressive growth potential. They are often dominant players within established industries, and their brand names may be familiar to a national consumer audience. Large-cap firms often have a reputation for producing quality goods and services, a history of consistent dividend payments, and steady growth. Large-cap companies are typically firms with a market value of $10 billion or more.Market cap measures what a company is worth on the open market, as well as the market's perception of its future prospects, because it reflects what investors are willing to pay for its stock. Why is market capitalization such an important concept? It allows investors to understand the relative size of one company versus another. For example, a company with 20 million shares selling at $50 a share would have a market cap of $1 billion. It is calculated by multiplying the price of a stock by its total number of outstanding shares. Market cap-or market capitalization-refers to the total value of all a company's shares of stock. With that knowledge, you’ll be better prepared to build a balanced stock portfolio that comprises a mix of "market caps." If you're creating an investment strategy designed to help you pursue long-term financial goals, understanding the relationship between company size, return potential, and risk is crucial.
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