Tip - What is a penny stock?

The term penny stock has evolved with the market. In the past, penny stocks were stocks that traded for less than a dollar per share. The SEC, however, modified the definition to include all shares trading below $5.If some of these stocks now trade above $1, why are they still called penny stocks? Well, even though some of these stocks may be selling for more than pennies, they are still called penny stocks because they are perceived the same way that stocks trading under a dollar were perceived in the past: as very risky investments.
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