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Market value of equity is the total value, measured by market prices, of all the outstanding ownership shares of a company. Another name for ownership shares is stock. In other words, market value of equity is the total value of all the outstanding stock as measured in the stock market at a particular time.

Let’s say International Flower Co. issued 1 million shares of stock at $25 per share. This was the first stock the company offered and represented all the stock of the company. On the day it issued the stock at that price, it had a market value of equity of $25 million. But a week later, the stock price rose to $30 per share. The company’s market value of equity increased to $30 million.

Market value of equity is another word for market capitalization. It is one measure of a company’s size, but it is not the only one.

In late 2014, Apple was the largest company in history as measured by market value of equity. Its value was over $700 billion. This does not mean it had the most employees, or the most offices, or necessarily the most revenue – just the most market capitalization.

Understanding a company’s size can help investors diversify their investments across large and small companies.

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