Secondary Stock

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.

BREAKING DOWN '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.

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RELATED FAQS
  1. What constitutes a secondary market?

    Find out what constitutes a secondary market, and learn why that term can be applied far more broadly than you might initially ... Read Answer >>
  2. Why are the trades that occur in the secondary market important to a firm?

  3. Why do we need a secondary market?

    Find out why secondary markets play a crucial role in economic activity by promoting efficiency, safety, information and ... Read Answer >>
  4. When does a primary market become a secondary market?

    Understand the difference between the primary and secondary markets and why the secondary market is where investors go to ... Read Answer >>
  5. What kind of assets can be traded on a secondary market?

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  6. What is the average range for the price-to-earnings ratio in the electronics sector?

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