Question

How does market capitalization of a company affects it share price?

Answer 1

Shrivasthan,

$\mathrm{Market}\mathrm{capitalisation}=\mathrm{No}.\mathrm{of}\mathrm{shares}\mathrm{outstanding}\times \mathrm{market}\mathrm{price}\mathrm{per}\mathrm{share}$

So, if the value of market capitalisation increases share price will also increase and vice-versa keeping the no. of shares outstanding constant.