Definition: Small cap are generally small companies that have just incorporated. They have a market capitalization of less than $1 or $2 billion, depending on who is giving you the definition. These companies do well early in an economic recovery, when interest rates are low and they have easy access to funds to invest into their growth. However, they are the riskiest stocks because smaller companies are more likely to fail.
Also Known As: Small Capitalization
Examples: The stock value of a small cap fund can increase rapidly, but can also lose money easily if the economy turns south.
