Financial Glossary
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Equity Market Capitalization
- A measure of the total market value of an equity market. The measure is calculated by taking the market capitalization of all companies in the equity market and adding them together to arrive at the capitalization for the market as a whole.
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Market Capitalization
- The total dollar market value of all of a company's outstanding shares. Market capitalization is calculated by multiplying a company's shares outstanding by the current market price of one share. The investment community uses this figure to determining a company's size, as opposed to sales or total asset figures.
Frequently referred to as "market cap".
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Market Capitalization Rule
- A rule set by the New York Stock Exchange (NYSE) to determine a minimum market value to be listed continuously. The Market Capitalization Rule states that companies must maintain a minimum value of $25 million over 30 consecutive days to remain listed. This standard value was set in 2004.
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Stock Market Capitalization To GDP Ratio
- A ratio used to determine whether an overall market is undervalued or overvalued. The ratio can be used to focus on specific markets, such as the U.S. market, or it can be applied to the world market depending on what values are used in the calculation.
Calculated as:
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Weighted Average Market Capitalization
- A stock market index weighted by the market capitalization of each stock in the index. In such a weighting scheme, larger companies account for a greater portion of the index. Most indexes are constructed in this manner, with the best example being the S&P 500.
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