Series 7 Exam Question 195: Answer and Explanation

Question: 195

Which of the following is included in a preliminary prospectus?

I. The purpose for the funds being raised

II. Financial statements

III. A written statement in red citing that the prospectus may be amended and a final prospectus issued

IV. The final offering price

• A. I and II
• B. I, II, and III
• C. II and IV
• D. I, II, III, and IV

Correct Answer: B

Explanation:

B. A preliminary prospectus includes the purpose for the funds and financial statements. Because a preliminary prospectus (red herring) is printed before the final price is established, it may include a projected price range that is subject to change.