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Finance Dictionary and Glossary of Investment Terms
Penny stock
Definition 1.
Used in the context of general equities. Stock that typically sells for less than $1 a share, although it may rise to as much as $10/share after the initial public offering, usually because of heavy promotion. All are traded OTC, many of them in the local markets of Denver, Vancouver, or Salt Lake City.
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Definition 2.
A stock which sells for less than one dollar per share (or in some cases, less than five dollars per share). Most penny stocks have only a few million dollars in net tangible assets and have a short operating history. Penny stocks are almost always small cap stocks, but the reverse isn't necessarily true.
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Definition 3.
A highly speculative stock that doesn''t trade on any of the major exchanges. The share price typically is less than $1. Penny stocks are prone to all sort of speculative bubbles, trading inefficiencies and other difficulties. They are quite risky.
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Definition 4.
A stock that sells for less than $1 a share but may also rise to as much as $10/share as a result of heavy promotion. All penny stocks are traded OTC or on the pink sheets.
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