Penny stocks, also known as microcap stocks, are defined by their low market capitalization and low trading prices. These stocks are considered highly illiquid due to their limited trading activity and are typically found on smaller exchanges. As a knowledgeable professor in the field of finance, it is important to understand the potential risks and rewards associated with investing in penny stocks. While their low prices may be enticing, they also carry a higher level of volatility and potential for fraud. Therefore, thorough research and caution should be exercised when considering these types of investments.
