Future Business Leaders of America (FBLA) Securities and Investments Practice Test

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Study for the FBLA Securities and Investments Test. Enhance your financial expertise with well-crafted questions, hints, and detailed explanations. Get exam-ready today!

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What does an indication of interest signify?

A commitment to purchase securities immediately
An investor's expression of interest in a new issue
A formal offer for purchasing shares
A professional endorsement of the security

The correct answer is: An investor's expression of interest in a new issue

An indication of interest signifies an investor’s expression of interest in a new issue. This term is commonly used in the context of initial public offerings (IPOs) or other new securities offerings. When investors indicate interest, they are essentially communicating their intent to consider purchasing the securities once they become available, but it does not constitute a binding agreement or commitment to purchase. This expression of interest allows underwriters and issuers to gauge demand for the security before the formal offering takes place, which can be crucial for pricing and structuring the offering. Investors can show this interest typically during a roadshow or preliminary offering period, where they provide feedback to the company on potential pricing and volume without making a definitive purchase commitment.