Stocks Beginner: The Stock Prospectus

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Choose wisely. There is only one correct answer to each question.

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1.
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.
2.
All of the following may be found on the cover of a stock prospectus except _______.
Choose wisely. There is only one correct answer.
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.
3.
Where can you get a stock prospectus?
Choose wisely. There is only one correct answer.
All of the other options. You can obtain a prospectus from the company, its underwriters, or on the Internet (EDGAR).
4.
All of the following information is available in a stocks preliminary prospectus except _______.
Choose wisely. There is only one correct answer.
The offering price. The offering price is not included in the preliminary prospectus, which is published before the price is finalized.
5.
All of the following are situations in a prospectus that may indicate trouble, except for which?
Choose wisely. There is only one correct answer.
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.