Skip to content

CFA Level I · CFA Level I Exam · Fixed-Income Markets for Corporate Issuers

A corporate issuer sells a bond directly to a small group of institutional investors without registering it with the securities regulator. Which feature most likely describes this issuance?

This is a private placement. Unregistered sales to a small group of institutions involve lighter disclosure requirements but result in less liquidity, because the securities are not widely traded in a secondary market. A public offering would need a prospectus and registration.

  1. AThe bond is sold through a public offering with a prospectus
  2. BThe bond is a private placement with less liquidity and fewer disclosure requirementsCorrect
  3. CThe bond is a money market instrument that matures within one year

Explanation

Unregistered sales to a limited investor group are private placements. They carry lighter disclosure than public offerings but are less liquid and have a smaller secondary market. A public offering requires registration, and the stem does not indicate maturity under one year.

Did you get it right without looking?

One question tells you little. A timed set on Fixed-Income Markets for Corporate Issuers shows your real accuracy, how long you take and where you lose marks.

Practise Fixed-Income Markets for Corporate IssuersFree diagnostic mock

More Fixed-Income Markets for Corporate Issuers questions