What is a prospectus? a. A letter issued by the SEC authorizing a new issue of securities. b. A...

Question:

What is a prospectus?

a. A letter issued by the SEC authorizing a new issue of securities.

b. A report stating that the SEC recommends a new security to investors.

c. A letter issued by the SEC that outlines the changes required for a registration statement to be approved.

d. A document that describes the details of a proposed security offering along with relevant information about the issuer.

e. An advertisement in a financial newspaper that describes a security offering.

Registration Statement:

A registration statement is a collection of documents that a company files with the SEC at the time of a new equity issue. The goal of this statement is to provide information to the SEC and investors about the company and the new issue.

Answer and Explanation:

a. Incorrect.

It is filed by the company, not the SEC.

b. Incorrect.

The SEC does not make recommendations.

c. Incorrect.

It is filed by the...

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The Securities & Exchange Commission: Definition, History & Purpose

from Accounting 101: Financial Accounting

Chapter 5 / Lesson 12
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