SIE (Securities Industry Essentials) Practice Exam

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Which of the following is true of the cooling-off period?

  1. A final prospectus must be submitted

  2. Trading of the security is allowed

  3. A preliminary prospectus may be submitted

  4. No promotional efforts may be made

The correct answer is: A preliminary prospectus may be submitted

A final prospectus must be submitted during the pre-selling period. This is the document that contains important information about a security, such as its risks, terms, and financial data. While trading of the security is allowed during the cooling-off period, it is not required to have a final prospectus submitted. Additionally, promotional efforts may be made during this period, making option D incorrect. The cooling-off period is a time frame between the pre-selling period and the effective date of the offering, during which a preliminary prospectus may be submitted and used to solicit interest from potential investors. Therefore, option C is the only correct statement about the cooling-off period.

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