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Question 1

preliminary “red herring” prospectus

Answer 1

available for distribution to potential purchasers prior to the actual decision to distribute securities. If insufficient interest is apparent, the issue may be cancelled.

Question 2

greensheet

Answer 2

internal information memorandum, used to give an investment dealer’s personnel background information that could be used in discussions with potential purchasers. It is not an actual document for distribution to the public.

Question 3

final prospectus

Answer 3

prepared once the final decision is made to proceed with the issue - based partly on the feedback received from the Preliminary Prospectus.

Question 4

which is cheaper: traditional underwriting or bought deal?

Answer 4

bought deal. issuer risk is similar as dealer is acting as principal. distribution is narrower as often sold as private placements.

Question 5

short form prospectus system (SFPS)

Answer 5

SFPS has significantly reduced the costs and time required to bring a new issue to market for certain qualified issuers aka senior reporting issuers. Such issuers may use a short-form prospectus - different from the Simplified Prospectus system used by mutual fund companies - that focuses on matters relating primarily to the securities being distributed, without the extensive information contained in a full prospectus.