5 things to know about penny stocks before you invest
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What is a penny stock?
A penny stock is a relatively low-price stock which has a low market capitalisation. In India, stocks that trade under Rs.10 fall in this category.
Text: Centre for Investment Education and Learning (CIEL)
Text: Centre for Investment Education and Learning (CIEL)
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Keep this in mind
There are fewer shareholders, large bid-ask spreads, and limited disclosure of information for these shares.
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Penny stocks: All you need to know
Such stocks have low liquidity. So the price can be manipulated by buying a large lot of shares to create a price spike or offloading shares to make prices fall.
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Higher risk, higher rewards
Penny stocks have a higher level of volatility, resulting in higher potential reward and greater risk.
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Penny stocks 101
Since these stocks are prone to price manipulations, sudden delisting and regulatory scrutiny are added risks.