What is market capitalization, and what is the difference between large-cap and mid-cap stocks?
Market capitalization (market cap) represents the total market value of a company. It is calculated by multiplying the number of shares of the company with its current stock price. On the basis of this market cap, companies are segregated into large-caps, mid-caps and small caps. There is however no standard way to categorize the companies on the basis of this value. At BIRLA SUN LIFE INSURANCE, we define mid-caps as companies having market capitalization between US$ 100mn to US$ 2bn. Generally, while large caps are considered to be the present industry leaders, mid caps are the emerging leaders of the future. Mid-caps offer higher risk-return profile than large caps. They rise faster than large-caps in bull markets, but may also fall at the same pace. when the markets collapse.
