What is Market Capitalization?

Example

If Royal Bank (RY.TO) trades at $150 with 1.4 billion shares outstanding, its market cap is about $210 billion. It is a "large cap" stock.

Common categories:

• Large cap: > $10B — e.g., Canadian banks, Shopify
• Mid cap: $2B to $10B
• Small cap: < $2B

The ETF XIC.TO (iShares S&P/TSX) is cap-weighted: the largest companies carry the most weight in the fund.

Why It Matters

Market capitalization determines a stock's weight in an index and in index ETFs. It also helps assess risk level: small caps are generally more volatile but offer higher growth potential.