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

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What is the primary purpose of a Tombstone Ad?

To promote the sale of real estate
To call attention to the new issuance of securities
To advertise financial services to consumers
To announce dividend payments from a corporation

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

The primary purpose of a Tombstone Ad is to call attention to the new issuance of securities. These advertisements are typically succinct and straightforward, providing essential information about a security offering, including the name of the issuer, the type of security being offered, the aggregate amount of the offering, and sometimes the names of the underwriters. Tombstone Ads serve as legal notices that inform potential investors about investment opportunities while also adhering to regulatory requirements. They are named "tombstone" because of their distinctive layout that resembles a gravestone, presenting information in a manner that is both clear and concise. This type of advertisement does not delve into promotional language or sales tactics, focusing instead on conveying factual information about the security being offered. In contrast, options like promoting real estate or advertising financial services target different sectors and objectives. Announcing dividend payments serves a separate function aimed exclusively at existing shareholders, rather than informing potential investors about new securities.