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Stocks Beginner: Small, Mid, and Large-Cap Stocks

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1.
The XYZ Hi-Technology company is four years old and already has a market value of one billion dollars. Its stock is therefore large-cap.
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False. Large-cap stocks are the stocks of large, established companies. This hypothetical company does not fit that definition.
2.
If the Zap! Internet stock is selling for $50 per share, and 4 million shares of it are owned by public investors, what is its capitalization?
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$200 million. To calculate capitalization, multiply the price per share by the number of shares owned by the public.
3.
Baby blue chips are mid-cap stocks with good growth records.
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True. As such, they have a good chance of becoming blue chip stocks.
4.
Small-cap companies do not pay dividends because they usually dont earn profits.
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False. Small-cap companies may forgo paying dividends to reinvest those dividends for future company growth.
5.
________ is a characteristic of small-cap stocks.
Choose wisely. There is only one correct answer.
Price volatility. Because small-cap companies may behave unpredictably, their stocks may, too.