The SEC Allows for a Private Placement Exemption Because

question 34

Multiple Choice

The SEC allows for a private placement exemption because:

• A) registration of "blue chip" securities is not necessary
• B) small investors have insufficient information about the background of such offerings, so they need additional protection
• C) small issuers need a break in the costs of the process to be able to compete effectively with large securities' issuers
• D) purchasers of these securities are sophisticated and more able to protect themselves when purchasing unregistered securities
• E) issuers need greater flexibility when dealing with large numbers of small investors

---

Definitions:

Marginal Revenue

The extra revenue obtained from the sale of an additional unit of a product or service.

Substitutes

Goods or services that can be used in place of each other, where an increase in the price of one leads to an increase in demand for the other.

Elastic

A characteristic of demand or supply where the quantity demanded or supplied responds significantly to price changes.

Imperfect Competition

A market structure characterized by a few sellers or buyers, creating an environment where the entities do not have to accept the market price and can influence it instead.