question archive 1) Strings and Horns Corporation files a registration statement and delivers a prospectus to the appropriate parties
1) Strings and Horns Corporation files a registration statement and delivers a prospectus to the appropriate parties
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1) Strings and Horns Corporation files a registration statement and delivers a prospectus to the appropriate parties. These items are intended to enable the evaluation of certain financial risks by
a. market professionals to explain to all investors.
b. government regulators to disclose to the general public.
c. sophisticated investors only.
d. unsophisticated investors.
2) Grand World Company is a public company that is poised to issue securities that do not qualify for an exemption from registration. This means that Grand World Company must
a. file a registration statement with the SEC.
b. issue the securities through an online registration site.
c. refrain from issuing the securities to unregistered investors.
d. register the securities with a national stock exchange.
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Answer:
1) d. unsophisticated investors.
2) a. file a registration statement with the SEC.
Step-by-step explanation
1.
Unsophisticated, or more accurately, undisciplined investor refers to a tendency of buying and selling low of shares. It follows the market herd such that a group of investors ignores their own financial information and follows the decisions of other investors. In the above case, a registration statement that is delivered to the appropriate parties will be used by investors while making their decisions as opposed to the investors making decision based on their own financial information.
2.
There are various reasons why securities may be exempt from the requirements of registration. The securities are considered safe when they are issued by a government authority. Therefore, to file securities that are not exempt from registration, an organization needs to file a registration statement with the SEC.
