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Small capOne of a trio of terms commonly used to rank companies according to their size, the others being 'mid cap' and 'large cap'. 'Cap' is short for 'market capitalisation' which is calculated by multiplying the number of shares which a company has in issue by the current market price. So a company with 500 million shares in issue and a share price of 50p has a market cap of £250 million.This would probably make it a small cap, but there are no fixed rules about where the thresholds lie. 'Small cap', for instance, can refer to companies with market capitalisations of just £50 million or as much as £500 million.Of course, market cap is a moveable feast. If an AIM company is tipped in a Sunday newspapers, and its shares rise 30%, its market cap might leap from one side of the threshold figure to the other. Overnight it could turn from a small cap to a mid cap, even though its sales and earnings are the same.Some commentators argue that market cap isn't a very good measure of whether a company is big or small. A hot stock company might have a £1,000m market cap, but if it has sales of £500,000 and makes a big loss, can it really be described as a large company?Perhaps a better way of identifying a small cap is to leapfrog the whole question of market cap, and concentrate instead on the features that attach to this sort of company. They are:lack of researchwide bid-offer spreadspoor liquidityThat's a pretty negative way of looking at small caps, but it has the advantage of being realistic.Small capA stock with a small capitalization, meaning a total equity value of less than $500 million.Small cap Similar MatchesSmall Order Execution System (SOES)Small Order Execution System (SOES)Three-tiered system of automatic execution of an order at the best price. Size is either 200, 500, or, most often, 1000 shares. Small country assumptionSmall country assumptionThe assumption in an economic model that a country is too small to affect world prices, incomes, or interest rates. FTSE SmallcapFTSE SmallcapThe index of the share prices of the companies which are listed in the FTSE Actuaries All-Share Index but which are not large enough to appear in the FTSE 350 Index. See also FTSE Actuaries All-Share Index.Stock Exchange indices are designed to give investors an idea of the general movement of the stock markets and its overall value. By comparing the performance of their own portfolios with the performance of one of the Stock Exchange indices, investors can see how well they have done from a comparative point of view. In particular they can see whether they would have been better off putting their money in an index tracker fund.Stock Exchange indices are designed to give investors an idea of the general movement of the stock markets and its overall value. By comparing the performance of their own portfolios with the performance of one of the Stock Exchange indices, investors can see how well they have done from a comparative point of view. In particular they can see whether they would have been better off putting their money in an index tracker fund.The main sub-indices of the FTSE Actuaries All-Share are:FTSE 100: the 100 largest quoted companies in the UKFTSE MID 250: the next largest 250 companiesFTSE A 350: combination of FTSE 100 and FTSE 250FTSE Smallcap: the remaining companies listed in the FTSE Actuaries All-Share indexFTSE A Fledgling: companies too small to qualify for the FTSE All-Share FTSE AIM: companies trading on the Alternative Investment MarketTechMark: index of companies primarily involved in technologyThe companies in the FTSE Actuaries All-Share Index are also divided into 7 main industrial groupings:Mineral extractionGeneral industrialConsumer goodsServicesUtilitiesFinancialsInvestment trustsThese categories are divided further into 37 subcategories. Small firm effectSmall firm effectThe tendency of small firms (in terms of total market capitalization) to outperform the stock market (consisting of both large and small firms). Small capitalization (small cap) fundSmall capitalization (small cap) fundA mutual fund that invests primarily in mutual fund of companies whose market value is less than $1 billion. Small-cap stocks historically have been more volatile than large-cap stocks, and often perform differently from the overall market. Further SuggestionsSmall business policysmall traders Standard & Poors SmallCap 600 Index Nasdaq small capitalization companies Small issues exemption Small investor Small capitalization (small cap) stocks Small open economy |
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