1)What is a prospectus?

A letter issued by the SEC authorizing a new issue of securities.

A report stating that the SEC recommends a new security to investors.

A letter issued by the SEC that outlines the changes required for a registration statement to be approved.

A document that describes the details of a proposed security offering along with relevant information about the issuer.

An advertisement in a financial newspaper that describes a security offering.

2)Which one of the following is a preliminary prospectus?

Tombstone.

Green shoe.

Registration statement.

Rights offer.

Red herring.

3)JLK is a partnership that was formed two years ago for the purpose of creating new fad items and distributing them directly to consumers. The firm has been extremely successful thus far and has decided to incorporate and offer shares of stock to the general public. What is this type of an equity offering called?

Venture capital offering.

Shelf offering.

Private placement.

Seasoned equity offering.

Initial public offering.

4)The JOBS Act allows a company during a 12-month period to issue new securities through crowdfunding up to a limit of:

$100,000.

$250,000.

$500,000.

$750,000.

$1,000,000.

5)When selecting a venture capitalist, which one of the following characteristics is probably the leastimportant?

Financial strength .

Level of involvement.

Contacts.

Exit strategy.

Underwriting experience.

6)Roy owns 200 shares of R.T.F., Inc. He has opted not to participate in the current rights offering by this firm. As a result, Roy will most likely be subject to:

An oversubscription cost.

Underpricing.

Dilution.

The green shoe provision.

A locked-in period.