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44.What does the "red herring prospectus" contain?  A. A warning statement  B. Company financials  C. Offering price details  D. Share allocation details

Question

What does the "red herring prospectus" contain?

A. A warning statement
B. Company financials
C. Offering price details
D. Share allocation details

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Solution

The "red herring prospectus" is a document submitted by a company as part of a public offering of securities (such as stocks or bonds). This document contains important information about the company's operations, financial condition, and management.

A. A warning statement: Yes, the red herring prospectus often includes a warning statement. This is to inform potential investors about the risks involved in investing in the company's securities.

B. Company financials: Yes, the red herring prospectus includes detailed information about the company's financial condition. This includes balance sheets, income statements, and cash flow statements for the past three years.

C. Offering price details: No, the red herring prospectus does not include details about the offering price. This is because the final price is not determined until after the document is issued. The price range is typically included, but the final price is not.

D. Share allocation details: No, the red herring prospectus does not include details about the allocation of shares. This information is typically included in the final prospectus, which is issued after the price has been determined.

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