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

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What is the purpose of a Tombstone Ad?

To solicit investors for the purchase of shares
To warn investors against investments
To call attention to the new issuance of securities
To provide detailed financial data

The correct answer is: To call attention to the new issuance of securities

A Tombstone Ad serves the specific purpose of calling attention to the new issuance of securities. These advertisements are typically straightforward and include essential information such as the name of the issuer, the type of securities being offered, and the names of the underwriters. They are called "tombstone" because they have a minimalist, no-frills design, resembling a gravestone. This form of advertising is important for potential investors as it provides them with notice of upcoming investment opportunities without going into deep promotional detail. The focus of a Tombstone Ad is to inform the market that there is a new offering available, thereby allowing interested parties to seek more detailed information if they wish. The other options suggest functions that do not align with the primary role of a Tombstone Ad. Soliciting investors or providing detailed financial data implies a sales approach or comprehensive investment analysis, which is not the nature of Tombstone Ads. Warning investors implies a cautionary message, which is also not relevant to the factual, informative nature of these advertisements.