Business and Personal Finance Dictionary

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• MICRO-CAP STOCK
  
  A micro-cap stock is one with a smaller market capitalization-sometimes much smaller-than stocks described as small-caps. (Market capitalization is figured by multiplying the current market value by the number of outstanding shares.) The cut-off for deciding that a stock belongs in one category or the other is arbitrary, though the capitalization thresholds currently being suggested for micro-caps range from $50 million to $150 million. Micro-caps are not only the smallest of the publicly traded corporations, but they are also the most volatile, in part because they lack the reserves of a larger company to weather rough periods. And, because there are generally fewer shares of a micro-cap company in the market, a large transaction may affect the stock price more noticeably than a similar transaction would affect the stock price of a larger company that had many more shares in the market.
  
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