Which statements are TRUE about the "red herring" preliminary prospectus?

a. it is used to solicit indications of interest
b. it use terminates when the 20-day cooling off period expires
c. it contains the final offering price of the issue
d. it is not considered to be an "offer" of the issue

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Explanation:

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Options (a), (b), and (d) are correct about the "red herring" preliminary prospectus.

What is a "red herring" preliminary prospectus?

A red herring is a preliminary prospectus filed with the Securities and Exchange Commission (SEC), usually in connection with an initial public offering (IPO), that omits essential data about the offering, such as the price and quantity of shares issued.

During the 20-day cooling-off period, the red herring is utilized to elicit indicators of interest.

It is not an offer to sell; only the final prospectus, which is available as of the effective date, can be used to do so.

The ultimate offering price is not included in the "red herring." There is no price or only an estimate on the front cover.

The exact pricing isn't determined until the day before the effective date.

For more information about the preliminary prospectus, refer below

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