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    Question

    A prospectus used to raise capital from the public but

    which does not specify the price or quantity of the public issue is known as _________
    A Red Herring Prospectus Correct Answer Incorrect Answer
    B Abridged Prospectus Correct Answer Incorrect Answer
    C Shelf Prospectus Correct Answer Incorrect Answer
    D Draft Prospectus Correct Answer Incorrect Answer
    E Recurring Prospectus Correct Answer Incorrect Answer

    Solution

    A Red Herring Prospectus (RHP) is a preliminary document filed by a company with the SEBI (Securities and Exchange Board of India) who wishes to raise money through an IPO. The significance of Red Herring Prospectus is that it contains almost all basic information about the company for enabling the investors to take a decision about investing in the shares in the IPO. However, this document does not disclose details like the offer price, lot size or the issue date of the IPO.

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