The preliminary prospectus is commonly known as a(n) :

A) indenture.
B) tombstone.
C) registration statement.
D) red herring.
E) debenture.

Question

The preliminary prospectus is commonly known as a(n) :A) indenture.B) tombstone.C) registration statement.D) red herring.E) debenture.

Taylor Johnson · Accepted Answer

Final Answer : D, Explanation :  A preliminary prospectus is also known as a red herring because it contains a disclaimer stating that the registration statement has not yet become effective and therefore cannot be used to sell securities. This disclaimer is typically printed in red ink and alerts potential investors that the information contained in the prospectus may be subject to revision and should not be relied upon for investment decisions.

The preliminary prospectus is commonly known as a(n) :

A) indenture.
B) tombstone.
C) registration statement.
D) red herring.
E) debenture.

Definitions

Learning Objectives

Learning Objectives

Related questions