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Market capitalization

Market capitalization, often abbreviated to market cap or mkt. cap, is a business term that refers to the overall value of a company's stock. In essence, it is the price one must pay to buy an entire company. That is, if one multiplies the number of shares of the company by the current price of those shares, the result is the market cap.

The total market capitalization of every company listed on the New York Stock Exchange is greater than the amount of money in the United States.

Market cap is an important measure of the performance of a company's stock, as opposed to the company itself. It is not uncommon for a company's market cap to greatly exceed the book value of the company itself due to stock market oddities. For instance, in the late 1990s the shares of internet-related companies was highly valued by the market, and tiny companies with almost no sales had market caps of billions of dollars.

The opposite case, the book value of the company being more than the market cap, is typically more rare (selling shares is a method of raising money, after all). However, periodic dips in the market and other effects can result in such inversions of the market cap, making the company in question a target for the corporate raider.