Definition of Penny stock:
In the past, penny stocks were considered any stocks that traded for less than one dollar per share. The U.S. Securities and Exchange Commission (SEC) has modified the definition to include all shares trading below five dollars. The SEC is an independent federal government agency responsible for protecting investors as they maintain fair and orderly functioning of the securities markets.
A penny stock typically refers to the stock of a small company that trades for less than $5 per share. Though some penny stocks trade on large exchanges such as the New York Stock Exchange (NYSE), most trade via over the counter (OTC) transactions through the electronic OTC Bulletin Board (OTCBB) or through the privately-owned OTC Markets Group. There is no trading floor for OTC transactions. Quotations are also all done electronically.
US term for low-priced (typically from $10 to $5 and sometimes as low as $1, but not a penny) issues floated commonly by oil, gas, gold or other prospecting firms with little or no real assets, firms with short, erratic, or no track record of earnings, or once-good firms that have fallen on hard times and are ripe for sale. Their attraction lies in the potential for high percentage returns if the venture succeeds or the firm is takenover, but the speculative nature of underlying enterprise causes wild swings in their market prices. In the US, penny stocks are sold only in over the counter market. In the UK, however, (where they are called penny shares) they are traded on stock exchanges.
A common stock valued at less than one dollar, and therefore highly speculative.
How to use Penny stock in a sentence?
- Although some penny stocks trade on large exchanges such as the NYSE, most penny stocks trade via over the counter through the OTC Bulletin Board (OTCBB).
- Penny-stock promoters.
- A penny stock refers to a small company's stock that typically trades for less than $5 per share. .
- While there can be sizable gains in trading penny stocks, there are also equal risks of losing a significant amount of an investment in a short period.
Meaning of Penny stock & Penny stock Definition