Series 79 practice questionmediumFollow-On Offerings
In an at-the-market (ATM) follow-on equity offering, which of the following is true?
- AShares are sold from time to time at prevailing market prices rather than in a single transaction at a fixed price.✓ Correct answer
- BThe issuer must set a maximum offering price in the prospectus supplement.
- CShares may not be sold using a shelf registration statement.
- DATMs are only available to non-listed companies.
Explanation
Why A — Shares are sold from time to time at prevailing market prices rather than in a single transaction at a fixed price.
ATMs allow issuers to sell shares incrementally at market prices, enhancing flexibility and minimizing price disruption. The trap is thinking the price must be fixed or that only non-listed companies can use ATMs, which is incorrect.
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