Coffee Shops

Multiple Choice

Coffee shops.Bernice wants to open a chain of coffee shops and begins by asking her friends in various states around the country to invest through the purchase of securities in the coffee shops.Her friend Robbie says that he would like to invest but that she should be sure that she satisfies requirements of the Securities and Exchange Commission (SEC) .He tells her that she has to provide information to the SEC involving a description of the securities,an explanation of how proceeds will be used,information regarding the management of the company,and other matters.He tells her that she also has to provide a document to the SEC that will be provided as an advertising tool to potential investors who can rely on it to decide whether they should buy securities.Bernice says that she does not want to do that.She explains to Robbie that insofar as the coffee shop venture is concerned,she does not want to advertise,and she wants to offer securities only to a limited number of wealthy friends.Particularly,she has in mind Scott who has a net worth of at least $3 million and Mary,a psychiatrist.Mary recently filed bankruptcy because of some bad decisions involving an elaborate decoration of her office.Although her income for the past couple of years has been in the range of $80,000,business is improving based on her recent involvement with a number of patients suffering anxiety based upon a fear of alien invasion.Which of the following is the term for the document Robbie referenced to be provided to the SEC that will be used as an advertising tool by potential investors who can rely on it to decide whether they should buy securities?

A) An advertising statement
B) A prospectus
C) An inventory
D) A proposed income statement
E) A securities advertisement