question archive 1) Tarrytown Manufacturing Corporation wants to make an offering of securities to the pub-lic
1) Tarrytown Manufacturing Corporation wants to make an offering of securities to the pub-lic
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1) Tarrytown Manufacturing Corporation wants to make an offering of securities to the pub-lic. This offering is not exempt from registration under the Se¬curities Act of 1933. Before Tarrytown sells its securities, it must provide in¬vestors with
a. a forward-looking financial forecast.
b. an investment contract.
c. a prospectus.
d. samples of its products.
2. Metal Mining Corporation is a noninvestment company that wants to is¬sue stock of $3 million in a twelve-month period. Metal Mining, with less than $20 mil¬lion in annual sales, qualifies as a small business issuer. Before Metal Mining sells the stock, it must provide investors with
a. an offering circular.
b. a notice of the issue.
c. a red herring prospectus.
d. a tombstone ad.
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Answer:
1.c.a prospectus
2.a. an offering circular.
Step-by-step explanation
1.
Some securities are exempt from the Securities Act of 1933-requiring neither registration nor a prospectus,while some securities are not exempt from the 1933 act-requiring both registration and a prospectus.Corporations issuing not exempt securities to the public,must provide investors with a prospectus that describe the security being sold and the risk attached to the security,and must also file a registration with the SEC.Therefore, before Tarrytown sells its securities, it must provide investors with a prospectus.
2.
When a small amount is involved,the issuer must provide investors with an offering circular before the sale of the securities and it must also file with the SEC a notice of issue. Therefore,before Metal Mining sells the stock, it must provide investors with an offering circular.
