Question

What is Red Herring in an IPO?

• A. Prospectus
• B. Submission of Form
• C. Funds Generated during IPO
• D. Minimum Offer per Share

Answer 1

The Correct Option is A

A Red Herring in the context of an IPO (Initial Public Offering) refers to a preliminary prospectus. This document is filed with the Securities and Exchange Commission (SEC) and provides potential investors with crucial information about the offering. The Red Herring gets its name due to a red warning statement on the cover indicating that the information it contains is subject to change before the final prospectus is released.

The primary role of the Red Herring prospectus is to provide insights into the financial details, company history, and intended use of the proceeds from the IPO. However, it does not disclose the number of shares being offered or the price per share, as these are determined closer to the opening of the public offering.

The correct answer to the given question is Prospectus, as it accurately describes the Red Herring in the context of an IPO.