When considering penny shares it is helpful to note the low market price of shares and its correlation to low market capitalization.
A market capitalization has to do with a company's cumulative dollar market value of all outstanding securities. Investors often buy a large number of shares for little money, because penny shares are cheap. This preference makes the penny market extremely unpredictable. The higher the volatility the greater the risks in investing in penny shares.
Holders of shares in penny stock companies often find it risky to cash-out positions because it has little liquidity. Liquidity involves the compatibility of investments and responsibilities. This includes, liquid capital which is the amount of money owns by a firm. Market liquidity simply means the ease with which assets can be sold.
Accounting liquidity is the ability to meet cash obligations as at when due.
One of the major concerns that investors should take note of before acquiring penny shares is the lack of information surrounding the company offering the penny stock. Most of the information is unreliable, filled with lies, and misleading. Social media these days has made it very easy for fraud to be carried out. Even though the companies offering penny stocks are small, the scam involved can run into millions of dollars.
It is important to know that there are no guarantees when investing in penny shares during high inflation. At best they may be inflation safe but there are no 100% guarantees for returns.
Now that we have understandings of what penny stock is and some of the challenges involved in it. We can now move on to the 7 types of penny stocks you as an investor need to invest in Nigeria, lets dive right into it.
The seven(7) best penny stock to buy in Nigeria are;.... click the link below to continue reading
https://financenaija.com/7-best-penny-stocks-to-buy-in-nigeria-stock-market/
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