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.
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.
3.
Mid-cap stocks _______.
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Represent medium-sized companies. They are not necessarily the safest, and they usually do not pay the highest dividends of any stock.
4.
Why do growth and aggressive-growth mutual funds include small-cap stocks in their portfolios?
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Small-cap stocks are growth-oriented. As a result, they are very popular in growth-oriented mutual funds.
5.
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.