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.
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.
4.
If the Zing! Internet stock has a capitalization of $100 million dollars, it is probably a _______ stock.
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Small-cap. By most models, this capitalization is quite small.
5.
A medium-sized stock with a good growth record and the potential of becoming a large-cap stock is called a _______.
Choose wisely. There is only one correct answer.
Baby blue chip. In other words, the issuer is likely to become a blue chip company.