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    Question

    Issue of securities, debt or equity, to a limited number

    of subscribers, such as banks, FIs, MFs and high net worth individuals, is called? 
    A Primary issue Correct Answer Incorrect Answer
    B Secondary issue Correct Answer Incorrect Answer
    C Book building Correct Answer Incorrect Answer
    D Private Placement Correct Answer Incorrect Answer
    E Merchant Banking Correct Answer Incorrect Answer

    Solution

    Private placement is issuance of securities, debt or equity, to a limited number of subscribers, such as banks, FIs, MFs and high net worth individuals. Private Placement is arranged through a merchant/investment banker, who brings together the issuer and the investor(s). As securities are allotted to a few investors and the general public does not have much stake in it, the securities offered in a private placement are exempt from the public disclosure regulations.

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