When new securities are sold to a limited number of investors such as commercial banks, insurance companies, pension funds or mutual funds, this is

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When new securities are sold to a limited number of investors such as commercial banks, insurance companies, pension funds or mutual funds, this is referred to as a private placement. It is a common method used by companies to raise capital from large, sophisticated investors without having to go through the regulatory requirements and expenses associated with a public offering. Closed-end funds, hedge funds, or illegal activities are not relevant to this scenario.

When New Securities Are Sold to a Limited Number of Investors