A small cap company is a company whose market capitalization ( shares x value of each share) is small, under $1 billion.

Overview

A small cap company typically has under $1 billion under control and are hence considered small companies. Small companies generally are not able to secure the best ( prime) borrowing rates and wield reduced power, including a smaller market share. Being small, they are also less financially stable than larger companies, and are more likely to become

bankrupt Bankruptcy is a legal process through which people or other entities who cannot repay debts to creditors may seek relief from some or all of their debts. In most jurisdictions, bankruptcy is imposed by a court order, often initiated by the debtor ...

. However, they do generally have more growth potential and over time have greater but more volatile expected returns.

Overview

See also