SIE Knowledge of Capital Markets Question 36: Answer and Explanation

Question: 36

Which of the following is necessary in a registration statement?

• A. Description of the products and services to be provided by the issuing firm
• B. Names of members of the families of the founding officers
• C. Names and geographic location of subcontractors to be used in the work of the firm
• D. Names of competitors

Correct Answer: A

Explanation:

A: Choice A is correct because the S-1 registration statement of a public offering must include a prospectus and statement of additional information. The prospectus provides information necessary for a prospective investor to make a prudent decision regarding the risk involved in the security. This includes the persons who manage the company, how the business will operate, its assets, liabilities, revenue and expenses, and the items or services provided. The additional information may include other relevant information, such as whether the company has sold securities that are not registered. Choices B, C, and D are incorrect, as these are not considered part of the essential items of information that a potential investor would need to know to make a prudent decision.