FINRA Series 86 Research Analyst Practice Exam 2026 – Your All-in-One Guide to Comprehensive Exam Success!

Market capitalization refers to the total value of a company's outstanding shares of stock. It is calculated by multiplying the current share price by the total number of outstanding shares. This metric is important because it provides investors with a quick assessment of a company's size and market value. A larger market capitalization often indicates a more stable company with a stronger presence in the market, while smaller companies might represent higher growth potential but also higher risk.

The other options reflect different financial metrics which do not define market capitalization. For example, total debt focuses on a company's liabilities, total revenue pertains to income generated from sales, and the valuation of physical assets looks at tangible resources owned by the company. Each of these metrics serves distinct purposes in financial analysis but does not capture the concept of market capitalization, which is specifically concerned with shareholders' equity and the market's valuation of a company based on its stock price.