Groundlearn / Glossary / Market capitalisation
Market capitalisation
Also called market cap. A CFA term, defined in plain English with the distinction examiners test.
What it means
Share price multiplied by shares outstanding — the market value of a company’s equity.
The exam angle
Not the value of the firm. Enterprise value adds net debt, and is what you compare against EBITDA or EBIT.
Where it appears in the syllabus
- EquitiesCFA Level I · exam weight 11–14% · Market organisation, indexes, industry analysis, dividend models.
Related terms
- BetaThe sensitivity of an asset’s return to the market’s return — its share of systematic risk.
- Book valueThe accounting value of equity: assets less liabilities as reported.
- Capital asset pricing modelA model stating that an asset’s expected return equals the risk-free rate plus beta times the equity risk premium.
- Common shareAn ownership claim on a company’s residual cash flows and assets, normally carrying a vote and ranking last in…
- Cost of equityThe return equity holders require for bearing the residual risk of the business.
- Dividend discount modelValuing a share as the present value of its expected future dividends.
Educational content only. This is not financial, investment, legal or regulatory advice. Check the official curriculum for your own exam before relying on any definition here.
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