Secondary Stock

AAA

DEFINITION of 'Secondary Stock'

A stock that is considered riskier than blue chips because it has a smaller market capitalization. A secondary stock can relate to any type of company, in any industry. The primary definer of a secondary stock is the company's market cap, with any company's equity shares trading under a certain "large cap" level being considered a secondary stock.

INVESTOPEDIA EXPLAINS 'Secondary Stock'

Secondary stocks are more commonly referred to as mid-, small- or micro-cap stocks, depending upon their market capitalization. While market capitalization is a definite driver of a stock's risk level, most view large-cap stock as less risky than secondary stocks, due primarily to their market cap. Secondary stocks however often times can be less volatile than large cap stocks, thus all else held equal, being a less "risky" investment than a large cap.

RELATED TERMS
  1. Small Cap

    Refers to stocks with a relatively small market capitalization. ...
  2. Micro Cap

    A publicly traded company in the United States that has a market ...
  3. Mid Cap

    A company with a market capitalization between $2 and $10 billion.
  4. Mega Cap

    The biggest companies in the investment universe, as measured ...
  5. Market Capitalization

    The total dollar market value of all of a company's outstanding ...
  6. Nano Cap

    Small public companies with a market capitalization below $5 ...
RELATED FAQS
  1. Why does the efficient market hypothesis state that technical analysis is bunk?

    The efficient market hypothesis (EMH) suggests that markets are informationally efficient. This means that historical prices ... Read Full Answer >>
  2. How does the risk of investing in the electronics sector compare to the broader market?

    The risk of investing in the electronics sector closely approximates the risk of investing in the broader market. The electronics ... Read Full Answer >>
  3. How do markets account for systematic risk?

    Systematic risks provide markets with an unpleasant quandary. Economists, policy makers, directors, fund managers and investors ... Read Full Answer >>
  4. What stage of the economic cycle is usually the best for an investor to enter the ...

    The best time during the economic cycle for an investor to enter the electronics sector is when he has confidently identified ... Read Full Answer >>
  5. How do S&P 500 futures work?

    S&P 500 futures are a type of capital asset contract that provides a buyer the right to a predetermined selection of ... Read Full Answer >>
  6. Can I use the current yield to compare a bond to an equity investment?

    Investors should be careful when comparing the current yield on a debt security with the growth of an equity security. Yield ... Read Full Answer >>
Related Articles
  1. Markets

    Understanding Small- And Big-Cap Stocks

    If you don't realize how big small-cap stocks can be, you'll miss some good investment opportunities.
  2. Insurance

    Market Capitalization Defined

    Find out the differences between mega-, large-, mid- and small-cap stocks and how each suits different investing styles.
  3. Markets

    An Introduction To Small Cap Stocks

    When it comes to a company's size, bigger isn't always better for investors. Find out more here.
  4. Investing Basics

    What is a "Coupon"?

    In the financial world, “coupon” represents the interest rate on a bond.
  5. Investing Basics

    What is a Cyclical Stock?

    A cyclical stock is an equity security whose price is affected by ups and downs in the overall economy.
  6. Investing Basics

    What's the Primary Market?

    The primary markets are where investors can get first crack at a new security issuance.
  7. Investing Basics

    Explaining the Coupon Rate

    Coupon rate is the stated interest rate on a fixed income security.
  8. Investing Basics

    What are Ordinary Shares?

    Ordinary shares are any type of shares that are not preferred and don’t pay any type of predetermined dividend amount.
  9. Investing Basics

    Explaining the Spot Rate

    The spot rate is the immediate purchase price posted on exchanges for purchasing commodities, currency and securities.
  10. Options & Futures

    Key Factors Of The Russell 2000 Index

    The Russell 2000 index represents the small cap universe, with a broad selection of fast growth companies at the bottom end of the capitalization spectrum.

You May Also Like

Hot Definitions
  1. Geometric Mean

    The average of a set of products, the calculation of which is commonly used to determine the performance results of an investment ...
  2. Fisher Effect

    An economic theory proposed by economist Irving Fisher that describes the relationship between inflation and both real and ...
  3. Fiduciary

    1. A person legally appointed and authorized to hold assets in trust for another person. The fiduciary manages the assets ...
  4. Expected Return

    The amount one would anticipate receiving on an investment that has various known or expected rates of return. For example, ...
  5. Carrying Value

    An accounting measure of value, where the value of an asset or a company is based on the figures in the company's balance ...
  6. Capital Account

    A national account that shows the net change in asset ownership for a nation. The capital account is the net result of public ...
Trading Center