What Is A Penny Stock?

The first order of business here is to define just what the term; “penny stock” refers to. The bad news is that there are many mixed definitions out there regarding what this type of stock actually is. Therefore, you need to understand what things are considered to be penny stocks and then how to determine what the stock really is.

For example, a penny stock is a commonterm used to describe a stock that is inexpensive to purchase per share. This could mean:

· A stock that is priced under one dollar per share
· A stock that is priced under five dollars per share
· A stock that is traded on what is called pink sheets
· Any over the counter, or OTC, type of stock

The United States Securities Division says that a penny stock is one that is valued under the value of five dollars and is traded either on pink sheets (over the counter) or on the NASDAQ.