What is market capitalization?

Market capitalization refers to the total market value of a company's outstanding shares, which is an important financial metric used to gauge the size and value of a public company. It is calculated by multiplying the current market price of one share by the total number of outstanding shares. This figure helps investors assess a company's overall valuation in the market and plays a critical role in investment decisions.

Understanding market capitalization is fundamental because it provides insight into how the market perceives the company's growth prospects and risk level. A higher market cap generally indicates a more stable company, whereas a lower market cap might suggest higher volatility. In summary, option B accurately defines market capitalization, distinguishing it from other important financial metrics related to a company's performance or assets.