A Major Purpose of the Prospectus Is To

question 116

Multiple Choice

A major purpose of the prospectus is to:

• A)Inform investors of the security's rate of return
• B)Advise investors of the security's potential risk
• C)Distribute stock warrants to prospective investors
• D)List the security's dividend payment dates

---

Definitions:

Premerger Market Price

The share price of a company before the announcement or completion of a merger or acquisition, used as a reference point for evaluating the merger's impact.

Premium

The amount paid for an insurance policy or the amount by which a bond or stock sells above its par or face value.

Acquiring Firms

Companies that purchase the majority of equity shares of another company in order to take control of it.

Debt Restructuring

The process of negotiating and agreeing to new terms for debts with creditors to achieve some reduction in the financial burden.