Stocks Beginner: The Stock Prospectus

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1.
The Securities and Exchange Commission requires that prospectuses be written in plain English.
Choose wisely. There is only one correct answer.
False. The SEC is encouraging companies to use plain English, but dense legal and fiscal lingo can still be found in prospectuses.
2.
To find out how a company intends to invest the capital it raises by selling stock, which prospectus section should you check?
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Use of Proceeds. The "Use of Proceeds" section spells out how the proceeds from the stock offering are to be used.
3.
The stock prospectus is an abridged version of the information a company files with the _______.
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Securities and Exchange Commission. The prospectus must be filed with the SEC, which enforces securities disclosure provisions.
4.
All of the following may be found on the cover of a stock prospectus except _______.
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Risk factors. Risk factors are not spelled out on the cover of the prospectus, but all of the other listed information may be found there.
5.
While browsing XYZ Co.s prospectus, you just read that three of its board members are related to each other. Which section were you reading?
Choose wisely. There is only one correct answer.
Management. The management section of the prospectus will provide background information on board members.