Question

What is the difference between small-cap stocks, mid-cap stocks, and large cap stocks?

What is the difference between small-cap stocks, mid-cap stocks, and large cap stocks?

Homework Answers

Answer #1

Market capitalization is the market value of firm's stock, it is the product of number of outstanding share and Market price of stock. Based on Market capitalization, Firms are classified in three major categories-

  1. Large-cap stocks
  2. Mid-cap stocks
  3. Small-cap stocks

The basic difference between in above three is given as below -

Large-cap stocks Mid-cap stocks Small-cap Stocks
Market Capitalization (Market Value) Above $ 10 billions $ 2 to $ 10 billions Below $ 2 billions
Risk Less Risky More risky than large-cap stocks More risky than large and mid cap stocks
Growth Potential Less than mid-cap and small-cap Higher than large-cap Higher than large-cap and mid cap stocks
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