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Series 79 practice questioneasyFree Writing Prospectus

What is a free writing prospectus (FWP)?

  1. AA prospectus that is distributed free of charge to all investors
  2. BA written communication that constitutes an offer to sell securities and is used in addition to the statutory prospectus, permitted after the registration statement has been filed✓ Correct answer
  3. CA prospectus that does not need to comply with SEC content requirements
  4. DA prospectus written in plain English without legal terminology
Explanation

Why B — A written communication that constitutes an offer to sell securities and is used in addition to the statutory prospectus, permitted after the registration statement has been filed

A free writing prospectus (FWP) is any written communication that constitutes an offer to sell or solicitation to buy securities that is made after the registration statement is filed but is not the statutory prospectus. FWPs can include term sheets, fact sheets, emails, and electronic presentations used to market the offering. Under Rules 164 and 433, issuers and underwriters may use FWPs during the waiting period and post-effective period, subject to certain conditions including filing with the SEC and including a legend directing investors to the statutory prospectus.

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