When compared with selling stocks to the public, a private placement has
A) more government regulations.
B) higher costs.
C) guaranteed repayment provisions that can be enforced.
D) lower costs.
E) more legal requirements.

Question

Quizplus · Accepted Answer

Private placement involves selling securities directly to a small group of investors, which results in lower costs due to fewer regulatory requirements. In contrast, selling stocks to the public involves extensive government regulations, legal requirements, and higher costs. Private placements are generally exempt from registration with the SEC, which further reduces costs for the issuer. Although private placements do not have guaranteed repayment provisions, they do offer more flexibility in negotiating terms and conditions with investors.

When Compared with Selling Stocks to the Public, a Private