Investment Company and Variable Contracts Products Representative (Series 6)Practice Exam

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Which of the following activities must occur prior to going public?

Understand market demands
File a registration statement with the SEC
Develop a marketing strategy
Establish pricing guidelines

The correct answer is: File a registration statement with the SEC

Filing a registration statement with the SEC is a critical step that must occur before a company can go public. This registration statement includes detailed information about the company's business, financial condition, management, and the securities being offered. By filing this document, the company provides potential investors with necessary disclosures, ensuring transparency and compliance with federal securities laws. The SEC reviews this document to protect investors and ensure that all relevant information is disclosed before the public can invest in the company’s stock. While understanding market demands, developing a marketing strategy, and establishing pricing guidelines are also important activities in the preparatory process for going public, none of these can replace the legal requirement of filing the registration statement with the SEC. It is a prerequisite for moving forward with an initial public offering (IPO), as it formally registers the company’s intent to sell shares to the public and ensures that the offering is conducted in accordance with regulatory standards.