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. Large Cap - Big Cap

    A term used by the investment community to refer to companies ...
  3. Blue Chip

    A nationally recognized, well-established and financially sound ...
  4. Mid Cap

    A company with a market capitalization between $2 and $10 billion.
  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. How does a company decide when it is going to split its stock?

    There are no set guidelines or requirements that determine when a company will split its stock. Often, companies that see ... Read Full Answer >>
  2. Why are some spin-offs taxable and some are tax-free?

    The manner in which a parent company structures the spinoff and divests itself of a subsidiary or division determines whether ... Read Full Answer >>
  3. Which has performed better historically, the stock market or real estate?

    For the majority of U.S. history – or at least as far back as reliable information goes – housing prices have increased only ... Read Full Answer >>
  4. What's the difference between cash-on-delivery differ and delivery against payment?

    Cash on delivery and delivery versus payment describe different procedures and timing of payments. Cash on delivery describes ... Read Full Answer >>
  5. How do I use Trade Volume Index (TVI) to create a forex trading strategy?

    The trade volume index (TVI) indicates whether a security is being accumulated or distributed and is calculated using intraday ... Read Full Answer >>
  6. Why is the Trade Volume Index (TVI) important for traders and analysts?

    The trade volume index (TVI) is important for traders and analysts because it indicates whether an asset is being accumulated ... 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

    The Strong Dollar’s (Real) Toll On Tech Stocks

    A large portion of U.S. technology companies’ sales occur overseas, given the strong international business and consumer demand from many U.S. tech firms.
  5. Investing

    The Case For Stocks Today

    Last week, U.S. equities advanced with the S&P 500 Index notching new records. Investors are now getting nervous with rate and currency volatility spiking.
  6. Mutual Funds & ETFs

    Why You May Want To Be (And Stay) In Bonds

    Bonds are complicated, and it’s easy to feel intimidated or confused. Fortunately, you don’t need to be a numbers geek to be an informed investor.
  7. Investing

    What More Volatility Means For Momentum Stocks

    One byproduct of the recent tick higher in bond yields: a meaningful rise in volatility for both stocks and bonds.
  8. Investing

    How To Implement A Smart Beta Investing Strategy

    Smart beta investing is the notion of re-writing investment rules to improve investment outcomes by targeting exposures to intuitive ideas or factors.
  9. Investing Basics

    Explaining Buy Limit Orders

    A buy limit order allows traders and investors to specify the price that they are willing to pay for a security, such as a stock.
  10. Investing Basics

    Calculating the Macaulay Duration

    The weighted average term to maturity of the cash flows from a bond.

You May Also Like

Hot Definitions
  1. Yield Curve

    A line that plots the interest rates, at a set point in time, of bonds having equal credit quality, but differing maturity ...
  2. Productivity

    An economic measure of output per unit of input. Inputs include labor and capital, while output is typically measured in ...
  3. Variance

    The spread between numbers in a data set, measuring Variance is calculated by taking the differences between each number ...
  4. Terminal Value - TV

    The value of a bond at maturity, or of an asset at a specified, future valuation date, taking into account factors such as ...
  5. Rule Of 70

    A way to estimate the number of years it takes for a certain variable to double. The rule of 70 states that in order to estimate ...
  6. Risk Premium

    The return in excess of the risk-free rate of return that an investment is expected to yield. An asset's risk premium is ...
Trading Center