What Is Market Capitalization? Market capitalization refers to the total dollar market value of a company’s outstanding shares of stock. The investment community uses this figure to determine a company’s size instead of sales or total asset figures. In an acquisition, the market cap is used to determine whether a takeover candidate represents a good
What Is the Market Capitalization Rule? The market capitalization rule is a rule set by the New York Stock Exchange (NYSE) to determine a minimum market value for a company to continue to be listed on the exchange. The market capitalization rule states that companies must maintain a minimum market cap of $15 million over
What Is a Market Challenger? A market challenger is a firm that has a market share below that of the market leader, but enough of a presence that it can exert upward pressure in its effort to gain more control. Market challengers are able to jockey for industry leadership in several ways: Challenging the market
What Is Market Depth? Market depth refers to a market’s ability to absorb relatively large market orders without significantly impacting the price of the security. Market depth considers the overall level and breadth of open orders, bids, and offers, and usually refers to trading within an individual security. Typically, the more buy and sell orders that
What Is a Market Discount? A market discount is the difference between an asset’s stated redemption price and its lower price in the secondary market. For a fixed-income security, a market discount would exist if it trades below par value. Market discounts arise when the asset’s value on the secondary market decreases after it has
What Is a Market Disruption? A market disruption is a situation wherein markets cease to function in a regular manner, typically characterized by rapid and large market declines. Market disruptions can result from both physical threats to the stock exchange or unusual trading (as in a crash). In either case, the disruption creates widespread panic
What Are Market Dynamics? Market dynamics are forces that will impact prices and the behaviors of producers and consumers. In a market, these forces create pricing signals which result from the fluctuation of supply and demand for a given product or service. Market dynamics can impact any industry or government policy. There are dynamic market
What Is a Market Economy? A market economy is an economic system in which economic decisions and the pricing of goods and services are guided by the interactions of a country’s individual citizens and businesses. There may be some government intervention or central planning, but usually this term refers to an economy that is more
What Is Market Efficiency? Market efficiency refers to the degree to which market prices reflect all available, relevant information. If markets are efficient, then all information is already incorporated into prices, and so there is no way to “beat” the market because there are no undervalued or overvalued securities available. The term was taken from
What Is Market Exposure? Market exposure refers to the dollar amount of funds or percentage of a broader portfolio that is invested in a particular type of security, market sector, or industry. Market exposure is usually expressed as a percentage of total portfolio holdings, for instance, as in 10% of a portfolio being exposed to
