Question

Consumer Products Corporation wants to make an offering of securities to the public. This offering is not exempt from registration under the Securities Act of 1933. Before the firm sells its securities, it must provide investors with:
a. a forward-looking financial forecast.b. an investment contract.c. a prospectus.d. samples of its products.

Answer 1

Answer:

C. a prospectus.

Explanation:

Before a firm make an offering of its securities public, it must provide investors with prospectus as it contains the aims, purpose and objectives of the firm. All relevant information about the firm is contained therein.

Prospectus provides clarity to intending investors such as shares to be offerred for sale, issues on tax to be paid, investment policies, component of the fund and shares redemption etc. It is a legal document required by securities and exchange commission which gives information of an investment offering to the public about the sale of securities such as stocks, shares, bonds etc.

The prospectus must also give a concise information because investors will rely on it whether to invest by reviewing the investment fund and to check whether to invest in such fund.