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Understanding Market Capitallistation

Let's say in a room there are 100 boxes, each priced at Rs 100. What would be the value of all the boxes? It would amount to Rs100 x 100 boxes = Rs 10,000 If we replace the “boxes” with “shares of a company”, then according to the above working, the cost of all the shares of the company would be Rs 10,000, which is nothing but the total value of outstanding shares or market capitalization of the company. However, this brings us to another term, “OUTSTANDING SHARES”. OUTSTANDING SHARES are shares currently held by investors, including restricted shares owned by the company's officers and insiders, as well as those held by the public. However, one should note that shares that have been repurchased by the company are not considered as a part of outstanding shares. Now, if the price of the boxes were to go up due an increase in demand, the total prices of the entire set of boxes would go up. Similarly, when the value of the shares goes up, so does the market capitalizat...

Understanding Market Capitallistation

Let's say in a room there are 100 boxes, each priced at Rs 100. What would be the value of all the boxes? It would amount to Rs100 x 100 boxes = Rs 10,000 If we replace the “boxes” with “shares of a company”, then according to the above working, the cost of all the shares of the company would be Rs 10,000, which is nothing but the total value of outstanding shares or market capitalization of the company. However, this brings us to another term, “OUTSTANDING SHARES”. OUTSTANDING SHARES are shares currently held by investors, including restricted shares owned by the company's officers and insiders, as well as those held by the public. However, one should note that shares that have been repurchased by the company are not considered as a part of outstanding shares. Now, if the price of the boxes were to go up due an increase in demand, the total prices of the entire set of boxes would go up. Similarly, when the value of the shares goes up, so does the market capitalizat...