Market capitalization, also called market cap, is a measurement of a company’s financial size. It equals a company’s stock price multiplied by the number of shares outstanding. Companies with market caps larger than $10 billion are large-caps. Those with market caps smaller than $2 billion are small-caps. Mid-caps have a market capitalization between two and $10 billion.For example, if Joe’s Software has a stock price of $50, and 100 million shares outstanding, it has a market cap of $5 billion and is a mid-cap stock. Large-caps are generally the most mature and stable companies. Because of their size and established nature, their stock price tends to hold up better than mid-caps and small-caps when investor confidence falters. Mid-caps are somewhat riskier. Their performance may be less stable than large-caps when an economy falters. Thus, their stock price is less reliable. However, in a strong economy they have more growth potential and tend to outperform large-caps. Investors who are interested in growth over a relatively long investment time horizon—for example 10 or more years—often diversify their equities to include mid-caps and small-caps, as well as large-caps. This allows them to take advantage of the higher returns from mid and small-cap stocks, as well as the stability of large-cap stock.