Those small publicly traded businesses with share prices of less than $5 and capitalization of less than $50 million are referred to as penny stocks. Penny stocks may trade on any of the major stock exchanges. For investors the risk is generally greater and the chance of instant success is remote at best. To counter this relatively volatile environment an investor can participate for a relatively low investment dollar amount.
Market capitalization is the publicly traded value of a company; share price times number of shares outstanding. There are four basic levels: 1) Large Caps, 2) Mid Caps, 3) Small Caps and 4) Penny Stocks.