Which of the Following Statements Regarding Private Placements Is FALSE

question 33

Multiple Choice

Which of the following statements regarding private placements is FALSE?

• A)A private placement is a bond issue that does not trade on a public market but rather is sold to a small group of investors.
• B)Privately placed debt need not conform to the same standards as public debt;as a consequence,it can be tailored to the particular situation.
• C)In 1990,the U.S.Securities and Exchange Commission (SEC)issued Rule 144A,which significantly decreased the liquidity of certain privately placed debt.
• D)Because a private placement does not need to be registered,it is less costly to issue.

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Definitions:

Marginal Revenue

The rise in income generated by the sale of an extra product or service unit.

Total Revenue

The sum of all revenue a business earns from its operational activities, like goods sales or service provision, prior to expense deduction.

Demand Curve

A graphical representation of the relationship between the price of a good and the quantity demanded for a given period.

Marginal Revenue Curve

A graphical representation showing how marginal revenue varies as output level changes, typically downward sloping for firms in competitive markets.