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Penny Stocks

Penny stocks refer to trading of stock outside the major exchanges like NYSE, NASDAG or AMEX. It is a popular term in the U.S financial market. but is at times considered as negative . But the official Securities and Exchange Commission defines the penny stock as a low-priced, speculative security of a very small company, regardless of market capitalization or whether it trades on a securitized exchange like NYSE or NASDAQ or an "over the counter" listing service like OTCBB or Pink Sheets.

At times, the term penny stock is used interchangeably with microcap stocks, small caps and nano caps. The status of the penny stocks is determined by shareprice and not market capitalization or listing service.

In the UK markets penny stocks are sometimes called as penny shares. They refer to stocks and shares of small cap companies which are being defined as big companies. These stocks are also covered by a standard regulatory risk warning that is issued by the Financial Services Authority (FSA).

More Glossary Terms Explained here


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