Capitalization Method

Business, Legal & Accounting Glossary

Definition: Capitalization Method


Capitalization Method


Full Definition of Capitalization Method


1. Accounting: A method where the present value of an asset is determined by discounting its future cash flows. 2. Finance: A method of portfolio building where the manager purchases highly capitalized names in the stock index in proportion to its market capitalization. For instance, if the index has three stocks with the first stock having 60% capitalization of the index and the other two with 20% capitalization each, 60% of the portfolio would be composed of the first stock and the remaining 40% would be divided equally between the other stocks.


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Definition Sources


Definitions for Capitalization Method are sourced/syndicated and enhanced from:

  • A Dictionary of Economics (Oxford Quick Reference)
  • Oxford Dictionary Of Accounting
  • Oxford Dictionary Of Business & Management

This glossary post was last updated: 20th November, 2021 | 0 Views.