What type of stocks are typically traded on the Over The Counter Bulletin Board (OTCBB)?

The Over The Counter Bulletin Board (OTCBB) is primarily known for trading lower-priced stocks, commonly referred to as penny stocks. These stocks are typically associated with smaller companies that may have less liquidity and a greater risk profile. Penny stocks are often characterized by their low market capitalization and can be traded at a price of under $5 per share, making them accessible to a wider range of investors looking for potentially high returns, albeit with substantial risk.

In contrast, blue-chip stocks are established companies known for their stability and reliability, which tend to be traded on major exchanges rather than the OTCBB. Exchange-traded funds (ETFs) and mutual funds typically involve a collection of securities and are also primarily traded on formal exchanges, making them significantly different from the characteristics and risks associated with penny stocks on the OTCBB. Therefore, the selection of penny stocks as the type of stocks typically traded on the OTCBB is accurate given the context of the marketplace and the nature of the securities involved.