Article content

Penny Stock

The SEC defines a penny stock as a stock that trades for less than $5, and therefore is highly speculative. These types of stocks are risky and highly speculative because their lack of liquidity (less people trading in the stock thus less market maker activity), large bid-ask spreads, and limited financial disclosure. Penny stocks often trade over the counter through the OTCBB and pink sheets.

<< Back to Glossary Index