Market Capitalization equals the price per share of a company times the number of shares outstanding
Market Capitalization, often shortened as "Market Cap", is the total market value of a company's outstanding shares. Market capitalization is calculated by multiplying the number of shares outstanding (this includes the value of all listed categories of a corporation's stocks - preferred stock, common shares, etc) by the market price per share which is the current value of a company. For example, if a company has 10 million shares, and the current price per share is $10, then the company's market capitalization is (10 million shares x $10), or $100 million.
Market cap is the public market's gauge of how much a company is worth.
You may also see reference to "Mega cap" ($200B or more), "Micro cap" ($50M to $300M) and even "Nano cap" (under $50M).
Examples of Large cap include companies like Google.
For investors it is important to have some knowledge of how different classes behave. In general, the larger the market cap the greater the stability and the lower the risk. In general, large caps are mature companies and small caps are younger, growing companies. Small caps carry greater risk, but also more upside potential than large caps.
Some mutual funds focus on specific market cap classes and some strive for a mix of different classes.
The market capitalization or size of an industry, or entire stock exchange or entire nations may be calculated.
By the end of 2007 the market cap of the NY Stock Exchange was $15.65 trillion. Including the American SE and NASDAQ the total market cap for the US was $19.92T. The market cap for the entire world was just more than $55T at that time.