Penny stocks are very related to pink sheets, and you should have an understanding of both if you plan on investing in the stock market. It is an electronic quotation system for many OverTheCounter (OTC) securities. The name comes from the colour of the paper the quotes were originally printed on. Most pink sheets are associated with penny stocks nowadays.
1. Penny Stocks – What Are They?
The term penny stock simply refers to a stock that isn’t worth very much – under $5.00 per share. They can be traded normally, but you should note that they are very high risk investments. Although they can be traded on regular stock exchanges, companies that are listed in the Pink Sheets usually do so because they cannot meet the requirements of other exchanges like the NYSE and Nasdaq. Be careful when investing your money.
2. Unregistered
The Pink Sheets is not a registered stock exchange. As such, it can list companies that would otherwise be unable to raise capital through stock offerings. Although it is not regulated by the Securities and Exchange Commission (SEC) its trading system is only accessible by brokers licensed by the National...
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