Question:easy

Market capitalisation of a company refers to

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Market capitalisation uses the current market price, not face value or book value.
Updated On: Jul 13, 2026
  • face value of a share multiplied by the number of shares floated
  • market value multiplied by the number of subscribed shares
  • book value multiplied by the number of authorised shares
  • none of these
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The Correct Option is B

Solution and Explanation

Step 1: Understanding the Question:
We must identify the correct way market capitalisation of a company is calculated.

Step 2: Key Formula or Approach:
Recall the basic formula: market capitalisation equals the current market price of one share multiplied by the number of shares the company actually has outstanding with subscribers.

Step 3: Detailed Explanation:
Face value is only a nominal figure printed on the share certificate, used for accounting and legal purposes, and it stays fixed regardless of how the stock trades, so it cannot give a market based figure.
Book value comes from the company's accounts, reflecting net assets per share, and authorised shares are the upper limit a company's charter allows it to issue, which is often higher than what is actually subscribed, so this pairing also misses the mark.
The true market value of a company's equity at any point in time is the price the market is willing to pay per share, multiplied by how many of those shares are actually subscribed and held by investors.

Step 4: Final Answer:
Market capitalisation is market value multiplied by the number of subscribed shares. \[ \boxed{\text{Market value} \times \text{subscribed shares}} \]
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