What is the classification for small cap stocks based on market capitalization?

The classification of small cap stocks is typically associated with companies that have a market capitalization ranging from $300 million to $2 billion, although the exact definitions can vary among financial institutions and analysts. The correct classification for small cap stocks generally falls within the range that aligns closest with the answer you provided, but specifically, the widely accepted range categorizes them as companies whose market capitalization is between $300 million and $2 billion.

The reason the choice you selected might reflect a misunderstanding is that the common definition captures smaller companies at the lower end of that spectrum, starting at approximately $300 million. This is why in conventional finance discussions, the threshold is usually acknowledged as just under or around the million-dollar value range that can be associated with what constitutes small cap status. The other choices do not accurately reflect the generally accepted classification, as they either define larger cap categories or fall outside of the typical small cap range.

Overall, understanding the classification helps investors determine the risk profile associated with these stocks, which is important when building a diversified investment portfolio.