It's hard to check your email without hearing about the next "hot" penny stock that's going to make you rich. But what are penny stocks, and can they really deliver on those promises? Here's my 2 cents worth on penny stocks.
Low-priced, small-cap stocks are known as penny stocks. Contrary to their name, penny stocks rarely cost a penny. The SEC considers a penny stock to be pretty much anything under $5. And while there are sub $5 stocks trading on big exchanges like NYSE and NASDAQ, most investors don't think of these when asked to describe a penny stock.
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