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Capitalization rate (or "cap rate") is a real estate valuation measure used to compare different real estate investments. Although there are many variations, the cap rate is generally calculated as the ratio between the annual rental income produced by a real estate asset to its current market value .
Market cap is given by the formula =, where MC is the market capitalization, N is the number of common shares outstanding, and P is the market price per common share. [ 8 ] For example, if a company has 4 million common shares outstanding and the closing price per share is $20, its market capitalization is then $80 million.
A discount rate or capitalization rate is used to determine the present value of the expected returns of a business. The discount rate and capitalization rate are closely related to each other, but distinguishable. Generally speaking, the discount rate or capitalization rate may be defined as the yield necessary to attract investors to a ...
For example, if Company A had 20 million shares outstanding and a share price of $500, its market cap is as follows: $500 x 20,000,000 = $10,000,000,000 market capitalization
This number is sometimes seen as a better way of calculating market capitalization, because it provides a more accurate reflection (than entire market capitalization) of what public investors consider the company to be worth. [1] In this context, the float may refer to all the shares outstanding that can be publicly traded. [2]
R f is the expected risk-free return in that market (government bond yield); β s is the sensitivity to market risk for the security; R m is the historical return of the stock market; and (R m – R f) is the risk premium of market assets over risk free assets. The risk free rate is the yield on long term bonds in the particular market, such as ...
A common modern formula for the US market, which is expressed as a percentage, is: [19] [4] B u f f e t t i n d i c a t o r = W i l s h i r e 5000 c a p i t a l i z a t i o n U S G D P × 100 {\displaystyle \operatorname {Buffett\ indicator} ={\frac {\operatorname {Wilshire\ 5000\ capitalization} }{\operatorname {US\ GDP} }}\times 100}
It is a market capitalization-weighted price index [3] which compares the current market value of all listed common shares with its value on the base date of April 30, 1975, when the Index was established and set at 100 points. The formula of calculation is as follows: SET Index = ( Current Market Value x 100 ) / Base Market Value