Market Capitalization (Market Cap.) is a company's value that you normally hear about in the news. When CNBC says Apple is valued at 1.7 trillion dollars, they're talking about market cap.

Market Capitalization = Shares Outstanding x Share Price

Tech stocks market cap

Investors frequently use market cap to classify stocks and talk about large companies, medium-sized companies, and small companies. You might hear the terms: large-cap ($10b+), mid-cap ($2-$10b), and small-cap ($300m-$2b) thrown about willy-nilly.

Large cap stocks have generally been around a while, and are considered the big dogs in their respective industries.  Investors tend to lean toward large cap stocks for sustained growth, strong earnings and/or consistent dividend payments.

Mid-cap companies have a market cap of $2-$10 billion. These companies are not as established and can carry more risk than that of their large-cap counterparts. Inversely, they may have higher growth potential.

Small-cap stocks have a market cap between $300 million to $2 billion. These companies tend to be higher risk, but potentially greater reward.