A Major Purpose of the Prospectus Is To

question 90

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 risks.
• C) distribute stock warrants to prospective investors.
• D) list the security's dividend payment dates.

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Definitions:

Composition

The makeup or structure of something, such as the arrangement and proportion of parts within a work of art or a financial portfolio.

Stock's Beta

An indicator of how volatile a stock is compared to the general market, where a beta value above 1 signifies that the stock experiences more fluctuation than the market overall.

Standard Deviation

In finance, standard deviation measures the amount of variance or dispersion of a set of financial returns, indicating the investment's volatility.

Expansionary Fiscal Policy

An increase in government purchases, decrease in net taxes, or some combination of the two aimed at increasing aggregate demand enough to reduce unemployment and return the economy to its potential output; fiscal policy used to close a recessionary gap