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

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1.
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.
2.
A medium-sized stock with a good growth record and the potential of becoming a large-cap stock is called a _______.
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Baby blue chip. In other words, the issuer is likely to become a blue chip company.
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.
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.
Large-cap stocks are more likely than small-cap or mid-cap stocks to pay dividends.
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True. This is partly because they have enough funds to finance future growth. Some of them, however, may have less room to grow.