Question

Which of the following best defines the term public issue? Multiple Choice The purchase of securities...

Which of the following best defines the term public issue?

Multiple Choice

  • The purchase of securities from the issuing company by an investment banker for resale to the public.

  • A preliminary prospectus distributed to prospective investors in a new issue of securities.

  • The creation and sale of securities on public markets.

  • A public issue of securities in which securities are first offered to existing shareholders. Also called a rights offering.

  • Legal document describing details of the issuing corporation and the proposed offering to potential investors.

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Answer #1

A preliminary prospectus distributed to prospective investors in a new issue of securities.

Explanation

Public issue means the issue of share or convertible securities in the primary market by the company to attract investor. In public issue the share and securities are offered for sale for raising the capital from the public for which the company issue prospectus.

The public issue is of two types

1.IPO(initial public offering)

2. FPO(Further public offering)

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