Question:medium
What is Red Herring in an IPO?
What is Red Herring in an IPO?
Show Hint
Think about the document filed before the final price of an IPO share is fixed.
Updated On: Jul 14, 2026
- Prospectus
- Submission of Form
- Funds Generated during IPO
- Minimum Offer per Share
Show Solution
The Correct Option is A
Solution and Explanation
Step 1: Recall the IPO filing process.
Before shares are sold to the public, the company must first file a draft document with the securities regulator describing its business and the issue.
Step 2: Identify the special feature of this draft document.
This draft, called the Red Herring Prospectus, contains almost all details of the offer except the exact price or number of shares, which get added only in the final prospectus.
Step 3: Compare with the other options.
Submitting forms, the funds raised, and the minimum offer per share are all separate steps or figures in the IPO process, none of which are called a Red Herring.
Final Answer:
The Red Herring in an IPO refers to the preliminary prospectus. \[ \boxed{\text{Prospectus}} \]
Before shares are sold to the public, the company must first file a draft document with the securities regulator describing its business and the issue.
Step 2: Identify the special feature of this draft document.
This draft, called the Red Herring Prospectus, contains almost all details of the offer except the exact price or number of shares, which get added only in the final prospectus.
Step 3: Compare with the other options.
Submitting forms, the funds raised, and the minimum offer per share are all separate steps or figures in the IPO process, none of which are called a Red Herring.
Final Answer:
The Red Herring in an IPO refers to the preliminary prospectus. \[ \boxed{\text{Prospectus}} \]
Was this answer helpful?
0
Questions Asked in SNAP exam
In the following figure, the smaller triangle represents teachers; the big triangle represents politicians; circle represents graduates and rectangle represents members of Parliament. Different regions are being represented by letters of English alphabet. On the basis of the above diagram, answer the following questions: 
- SNAP - 2024
- Venn Diagrams