Private placements usually have several advantages associated with them,but also tend to suffer from specific disadvantages.Which of the following is a disadvantage of a private placement when compared to other methods of selling new securities?

Question

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Private placements typically involve higher interest costs as investors who are willing to invest in a private placement may demand a higher return due to the perceived higher risk associated with investing in a private placement. This is a disadvantage compared to other methods of selling new securities, such as a public offering, where interest costs may be lower due to the larger pool of potential investors. A is incorrect as private placements do not have strictly standardized features/terms. C is incorrect as private placements typically have reduced flotation costs compared to public offerings. D is incorrect as avoiding registration with the SEC is actually a benefit of private placements.

Private Placements Usually Have Several Advantages Associated with Them,but Also