If a company has 2,000,000 ordinary shares and the current price is €2.50, what is the market capitalisation?

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Prepare for the QFA Investments Exam 1. Study with flashcards and multiple-choice questions with detailed explanations. Enhance your understanding and succeed on your exam!

Multiple Choice

If a company has 2,000,000 ordinary shares and the current price is €2.50, what is the market capitalisation?

Explanation:
Market capitalisation is found by multiplying the total number of ordinary shares by the current price per share. Here, 2,000,000 shares times €2.50 per share equals €5,000,000. So the market capitalisation is €5,000,000. The other amounts would require a different price or a different number of shares (for example, €2,000,000 would come from using the share count alone or a lower price, €3,000,000 from a price of €1.50, and €10,000,000 from a price of €5.00).

Market capitalisation is found by multiplying the total number of ordinary shares by the current price per share. Here, 2,000,000 shares times €2.50 per share equals €5,000,000. So the market capitalisation is €5,000,000. The other amounts would require a different price or a different number of shares (for example, €2,000,000 would come from using the share count alone or a lower price, €3,000,000 from a price of €1.50, and €10,000,000 from a price of €5.00).

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