A firm has 30 million shares outstanding, and each share is traded at $100. Also, each shareholder gets a dividend of $2,000 annually. In this case, the market capitalization is
A) 30,000 shares, that is, 30 million shares/$100.
B) $200,000, that is, $2,000 × $100.
C) $3 billion, that is, 30 million shares × $100.
D) 20:1, that is, $2,000/$100.

Question

Quizplus · Accepted Answer

Market capitalization (or market cap) captures the total dollar market value of a company's outstanding shares at any given point in time (Market cap = Number of outstanding shares × Share price). Therefore, market cap is equal to $3 billion, that is, 30 million shares × $100.

A Firm Has 30 Million Shares Outstanding, and Each Share