LO12.7 Explain what a red-herring prospectus is. A red herring prospectus is a preliminary prospectus without any price. LO12.8 Explain what a blue sky law is. A blue sky law is a state regulatory law to prohibit unscrupulous promoters from selling securities. LO12.9 Discuss the investment banking process.
Investment bankers help businesses sell securities to the public.
They may sell to institutional buyers on a best efforts basis or actually underwrite the stock issue. Explain the valuation of common stock. Explain the concepts of market equilibrium and efficiency. The market price of a security must equal its value to the marginal investor.