Question

Public companies issued shares to public through document called ________________.

• A. Letter of offers & acceptance
• B. Offer for sale & acceptance
• C. Prospectus
• D. None of above

Answer 1

The correct option is C Prospectus

A Prospectus is a formal legal document that is required by and filed with the Securities and Exchange Commission (SEC) that provides details about an investment offering for sale to the public.

The preliminary prospectus is the first offering document provided by a security issuer and includes most of the details of the business and transaction in question; the ,final prospectus containing finalized background information including such details as the exact number of shares/certificates issued and the precise ,offering price is printed after the deal has been made effective. In the case of mutual funds, a fund prospectus contains details on its objectives, investment strategies, risks, performance, distribution policy, fees and expenses, and fund management.

A prospectus includes the name of the company issuing the stock or the mutual fund manager, the amount and type of securities being sold and, for stock offerings, the number of available shares.

The prospectus also details whether an offering is public or private, how much the underwriters are earning per sale and names of the company’s principals. A brief summary of the company’s financial information, whether the SEC approved the prospectus and other pertinent information is included as well.