Private placements can be advantageous, compared to public issue, because:
I. Private placements are cheaper to market than public issues.
II. Private placements may still be sold to the general public under SEC Rule 144A.
III. Privately placed securities trade on secondary markets.

Question

Quizplus · Accepted Answer

I only. Private placements are indeed cheaper to market than public issues because they involve selling securities directly to a small group of institutional or accredited investors, bypassing the costly and time-consuming processes associated with public offerings. SEC Rule 144A allows for the sale of privately placed securities to qualified institutional buyers, not the general public. Additionally, privately placed securities typically do not trade on secondary markets, making them less liquid than publicly issued securities.

Private Placements Can Be Advantageous, Compared to Public Issue, Because