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:

Chapter 13

refers to a type of bankruptcy that involves a repayment plan allowing individuals to pay back their debts over a period of time.

Preferential Payment

A payment made by a debtor to one creditor over others, typically before a bankruptcy, that can be subject to clawback during bankruptcy proceedings.

Chapter 7 Bankruptcy

A type of bankruptcy that involves the liquidation of assets to repay creditors, used when the individual or business is unable to reorganize debt and lacks the means to pay it off.

Discharged Debts

Debts that have been forgiven or eliminated, usually through bankruptcy proceedings, and are no longer legally enforceable.