Market capitalization & strategic portifolios

Market capitalization represents a business’s overall value. It determines the amount a traded company is worth currently based on its stock value. Market capitalization can determine a company’s value, but also, its expected growth rate and risk outlook. Market capitalization may have different categories that classify businesses to large, medium, small, and micro-cap. This can help in determining the growth rate and the expected risk from a certain stock. However, large-cap represent large successful firms with slow steady growth that has less unpredictable price changes than smaller firms (Beers, 2020). Market capitalization can be calculated by the number of shares outstanding multiply by the share price. The market capitalization method is considered an effective and easy method of assessing the risk within different sized companies, the main advantage of using the market capitalization method is that its direct process and easy to apply.