Stocks Beginner: The Stock Prospectus

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1.
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.
2.
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.
3.
All of the following information is available in a stocks preliminary prospectus except _______.
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The offering price. The offering price is not included in the preliminary prospectus, which is published before the price is finalized.
4.
All of the following are situations in a prospectus that may indicate trouble, except for which?
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Management is compensated with stock options. When management is compensated with stock options, it benefits personally when the company growsa potentially good sign. The other listed factors may mean trouble for the company.
5.
The Securities and Exchange Commission requires that prospectuses be written in plain English.
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False. The SEC is encouraging companies to use plain English, but dense legal and fiscal lingo can still be found in prospectuses.