Question

What information does the Market Capitalization (Market Cap) for Boeing of $200.407 Billion and Beta of 1.56 provide to an investor?

Answer 1

Market Capitalization

It presents market value of a public traded company. It is the multiplication of company’s market price of share and no. of outstanding share of company.

In given case, Market Cap for Boeing is $ 200.407 which means market value of is $ 200.407. Investor can compare this to book value of Boeing to get idea of how Boeing valued in capital market.

Beta ($\beta$)

Beta is the measure of sensitivity/change/movement of an asset due to change in market portfolio. Under CAPM, Beta represent systematic risk of a stock. Systematic risk is non- diversifiable risk.

In given case, Beta of Boeing is 1.56 which means one point change in market could change Boeing stock price by 1.56 point. Investor refers to Beta to know the risk level of the stock. In our case, Boeing is a risky assets as it has high sensitivity (beta) to market movement.