Investors are occasionally confronted with investment opportunities that appear to be extremely attractive. They should always be viewed with extreme skepticism because, in the investment world, there is a direct correlation between risk and reward. Why, for example, would a company borrow money (i.e., by selling bonds) from you and promise to pay you 28 percent at a time when banks are lending at 6 percent and factors are lending at 12 percent? The only possible conclusion is that the company is not credit worthy.
All publicly held companies are required to file periodical reports with the SEC, and all of these reports are available to the public through the SEC's Electronic Data Gatheing, Analysis, ans Retrieval (EGDAR) database. The key periodic reports that should be reviewed by an investor are the company's Forms 10-K, Forms 10-Q, and Forms 14-A.