Summarize the steps in the corporate financing process, explain the different methods of offering securities to the public, summarize the prospectus system and evaluate after-market stabilization. a corporate issuer chooses a dealer to act as principal or agent in a new security issue. the dealer prepares analyses of market conditions and other factors and suggests the terms and type of the issue, including debt or equity. securities are then issued as a public offering or private placement (one or more large institutional investors buy the entire issue). the prospectus is the primary information document for a new securities issue and is based on the premise of full, true and plain disclosure of all material facts relating to securities being offered. most provinces require that issuers file both a preliminary prospectus and a final prospectus. the preliminary prospectus is a disclosure document required under provincial securities laws; it is also used to determine the level of interest of potential buyers of the security. companies that have previously made public distributions and that are subject to continuous disclosure requirements can use a short form prospectus. after the securities have been issued, the lead dealer may be required to provide after-market stabilization in any of three ways: overselling to establish a short position that will be covered later in the open market if the price falls below the issue price, penalizing members of the selling group that sell securities shortly after issue, or creating an open bid to buy securities at theoffer price.
