Mint Money Knowledge Center: What is a penny stock?

Investing terms that have been around for a long time tend to stay intact as the times change and investing changes as well. Penny stocks used to be the kind of stocks that were sold unregulated for one penny. While the investment world has retained the name of penny stocks, the reality these days is quite different.

What is a penny stock

 

What Is A Penny Stock

According to TheStreet.com, a penny stock is any stock that is sold for $5 or less either directly by the issuing companies, or through foreign exchanges. Penny stocks are not sold on the larger American stock exchanges and they are loosely regulated by the SEC. While penny stocks can sound exciting and accessible, the fact that they are only loosely regulated is what keeps many investors away.
 

How Do I Buy A Penny Stock?

According to the SEC, finding prices and buyers for penny stocks can be difficult. These days, there are websites you can use to find penny stock pricing and set up accounts to buy penny stocks directly. But since penny stocks do not trade every day like larger securities, it could be extremely difficult to find a buyer for your penny stocks. It is always best to learn as much as you can about penny stocks before you start trading them.

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