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Finance Glossary

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Penny Stock


Usually associated with companies that are considered very speculative. Often, penny stocks literally trade for, well, pennies. But there is no uniform definition. In fact, the NYSE considers any stock that trades for less than $5 a share to be a "penny stock." 500 pennies, in fact. So you could have some very large companies that are near financial death be classified as penny stocks, while some very small, extremely speculative and wildly volatile companies could sell for more than $5.