As part of the registration statement, called the preliminary prospectus, circulates to investors before the stock is offered. This preliminary prospectus is also called a(n):

Question

Quizplus · Accepted Answer

The preliminary prospectus that circulates to investors before the stock is offered is also called a red herring. It is called a red herring because it contains incomplete or inaccurate information and is intended to generate interest in the offering without committing the issuer to a specific price or number of shares.

As Part of the Registration Statement, Called the Preliminary Prospectus