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The “cap” in large cap refers to a company’s capitalization as determined by the total market value of its publicly traded shares.  Large cap is short for “large market capitalization.”

Large cap stocks are generally defined as the stock of publicly traded companies that have a market capitalization above $10 billion.  That number can vary depending on who is defining large cap stocks, but it is the range most commonly used in the financial industry. 

Large cap companies are usually the best-known companies traded in the public markets.  Some of these companies include Apple, Exxon-Mobile, Wal-Mart and Ford Motor Company.

Assume Conglomo Inc. is a publicly traded company. Its current stock price is $125 per share, and there are 200 million shares on the market.  Conglomo’s total market capitalization is:

200,000,000 shares x $125/share = $25,000,000,000

This $25 billion market capitalization is well above the large cap stock range definition.

 

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