Series 7 practice questioneasyCustomer Contact and Communications 1
A representative discussing a new issue with a prospect should describe a preliminary prospectus as:
- Aa final confirmation of allocation
- Ba research report exempt from filing
- Can offering document used before the registration becomes effective✓ Correct answer
- Da purchase contract that binds the customer
Explanation
Why C — an offering document used before the registration becomes effective
A preliminary prospectus, often called a red herring, is used during the cooling-off period before effectiveness. It provides material information but cannot be used to accept payment or confirm a sale.
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