In the United States of America, a penny stock, also known as a micro cap equity, refers to a share in a company which trades for less than $5.00.

                                                                                                    A penny stock that trades at a relatively low price and market capitalization, usually outside of the major market exchanges. These types of stocks are generally considered to be highly speculative and high risk because of their lack of liquidity, large bid-ask spreads, small capitalization and limited following and disclosure. They will often trade over the counter through the OTCBB and pink sheets.