The common stocks of emerging public companies are appealing investments because there is a greater likelihood of a faster rate of earnings growth.
Microcap stocks have higher return premiums because microcap stocks are perceived as riskier investments than stocks with greater capitalization.
Shareholders of microcap stocks are much quicker to divest themselves of those shares at the fi rst hint of “bad news.”
The market price of a microcap stock will never have any critical mass without substantial ownership by institutional investors, most notably microcap mutual funds.
The three most important features of microcap stock are liquidity, liquidity, and liquidity.
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