Question

Personal Accents, Inc., (PAI) is a publicly held company that specializes in selling a variety of skin- and hair-care products. The company owns specialty stores that appeal to both men and women. PAI recently obtained financing through the sale of bonds which have been rated as AAA by Standard & Poor's. Charlotte is an investor who pays very close attention to high-risk investments because she's interested in the huge profits th can be obtained from this type of investment. Charlotte usually prefers moderately risky investments so she can obtain a profit; but if something goes sour, she will not lose everything. Fearing the potential loss of money in high-risk investments, she has invested in PAI. She feels that the company is established and has maintained stable profits over the years. She is well aware of the different types of high-risk investments, but she chooses to invest more conservatively. Which of the following was required of PAI when it first issued publicly traded stock for the company? a. It had to provide a prospectus. b. It had to offer dividends. c. It had to provide the company budget to potential investors. O d. It had to offer a security index to the public. e. It had to offer the account executive's name to potential investors. Hide Feedback Incorrect

answer both please. thank you

Answer 1

(1): The answer is option “a” – it had to provide a prospectus.

Explanation – The prospectus is a detailed document and lists all opportunities, risks, and financial details of the company and this document is made available to investors, regulators and other parties who are interested in the issue.

(2): The answer is option “d” – selling PAI stock short.

Explanation – Short selling should be done only when the share prices are expected to fall. In this case PAI stocks are set to rise in a gradual manner and short selling will lead to losses.