Question

In the process of a securities offering, which document typically comes after the "Registration statement" and before the "Final prospectus"?

A) Preliminary prospectus.
B) Private placement memorandum.
C) Subscription agreement.
D) Offering circular.

Answer 1

The document that follows the registration statement and precedes the final prospectus in a securities offering is the preliminary prospectus, which is essential for informing potential investors about an upcoming IPO.

Step-by-step explanation:

In the process of a securities offering, following the filing of the registration statement, the document that typically comes before the final prospectus is the preliminary prospectus, also known as the "red herring" document. The preliminary prospectus is issued to potential buyers and includes most of the important details of the upcoming offering, except for the final price and number of shares.

An initial public offering (IPO) is when a company first sells its stock to the public. This is critical because it allows the company to raise funds to repay early investors, such as angel investors and venture capital firms, and to secure financial capital for significant expansion.