Companies that have capitalization amounts of more than $2 billion are known as _________.
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A. B. C. D.D
The correct answer is D. Large cap companies.
Large cap companies are corporations with a market capitalization of more than $10 billion. Market capitalization is the total dollar value of a company's outstanding shares of stock. A company's market capitalization is calculated by multiplying the current stock price by the number of outstanding shares.
A company's market capitalization determines its classification into one of three categories: small-cap, mid-cap, or large-cap. The cutoffs for these categories are not set in stone and can vary slightly depending on the source. However, as per the question, companies with a market capitalization of more than $2 billion would fall into the large-cap category.
Large-cap companies are typically well-established firms with a long track record of stable earnings and a proven business model. They are often household names and have a market-leading position in their industry. As a result, large-cap stocks are generally considered less risky investments than small-cap or mid-cap stocks.
In contrast, small-cap companies have a market capitalization between $300 million and $2 billion, while mid-cap companies have a market capitalization between $2 billion and $10 billion. Small-cap companies are generally considered more risky because they are often less established and have a shorter track record of financial performance. Mid-cap companies are somewhere in between, offering a balance of growth potential and stability.
In summary, large-cap companies are those with a market capitalization of more than $10 billion, while companies with market capitalization between $2 billion and $10 billion are classified as mid-cap companies. Companies with market capitalization between $300 million and $2 billion are classified as small-cap companies.