Test “Market Capitalization: Value of the Company”

Test: Market Capitalization: Value of the Company

1 / 8

What is market capitalization?

a) The total value of all the company’s shares that have been issued

b) The value of the company as a whole

c) The capital of the company invested in its own shares

d) The average price of the company’s shares

2 / 8

If a company has 200,000 shares in circulation, each valued at $5, then its market capitalization would be:

a) 1,000,000

b) 40,000

c) 100,000

d) 200,005

3 / 8

What information does market capitalization give you?

a) It allows you to quickly evaluate the value of the company without needing to delve into the details

b) It allows you to directly evaluate the company’s revenue

c) It tells you what the company does

d) All of the above

4 / 8

What happens to a company's market capitalization when its stock price falls?

a) It falls too

b) Market capitalization will increase due to increased supply

c) It remains unchanged

5 / 8

The group of companies with a low level of capitalization refers to those valued at:

a) Up to $200 million

b) Up to $2 billion

c) Up to $10 billion

d) More than $10 billion

6 / 8

What are the advantages of investing in stocks of companies with a low level of market capitalization?

a) They usually have a high growth potential

b) Their stocks are always more effective when markets fall

c) Their stocks are more liquid than those of high-capitalization companies

7 / 8

The high liquidity of high-capitalization companies usually means that:

a) You are more likely to be able to buy or sell stocks at your desired price, as there are many other buyers in the market

b) You are more likely to make a profit from their sale

c) You are guaranteed dividend payments

8 / 8

Why, during periods of economic downturns, do investors show more interest in high-capitalization companies?

a) The price of gold directly correlates with the stock prices of most major companies

b) Large companies typically have better financing

c) The value of stocks of high-capitalization companies is more likely to increase during economic instability

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Test “Market Capitalization: Value of the Company”

Beginners Course