Private placement
A) is the sale of capital stock to selected individuals.
B) is the sale of capital stock to investment bankers.
C) requires compliance with all securities laws.
D) maintains the ownership control of the original owners.

Question

Quizplus · Accepted Answer

Private placement is the sale of capital stock to selected individuals, usually institutional investors like banks, insurance companies, and pension funds. It is intended to raise funds from investors without offering the shares to the general public. The selected individuals must be considered "accredited investors" and the company issuing the shares must comply with securities laws such as Regulation D of the Securities Act of 1933. Private placement allows the original owners to maintain ownership control of the company.

Private Placement