CFA Level I · CFA Level I Exam · Fixed-Income Issuance and Trading
Compared with a public offering, a private placement of bonds is most likely to feature:
A private placement most likely has lower disclosure requirements and less liquidity. It is sold to a limited set of qualified investors without full public registration, and resale restrictions limit secondary-market trading compared with public offerings.
- Aa larger, more liquid secondary market
- Blower disclosure requirements and less liquidityCorrect
- Cmandatory registration with the securities regulator
Explanation
Private placements are sold to a limited group of qualified investors and are exempt from full registration, so disclosure is lighter. Resale is restricted, so liquidity is lower. The other options describe features of public offerings.
Did you get it right without looking?
One question tells you little. A timed set on Fixed-Income Issuance and Trading shows your real accuracy, how long you take and where you lose marks.
More Fixed-Income Issuance and Trading questions
- An investor wants to sell a large block of an illiquid corporate bond without moving the price. The venue most likely to help is:
- A corporation issues 90-day commercial paper with a face value of $5,000,000 at a discount rate of 4.8% per year on a 360-day basis. The pro…
- A corporate treasurer needs short-term funding of three months and wants to borrow in the wholesale market without pledging specific assets,…
- A cash lender extends an overnight repo against collateral with a market value of 5,250,000 and requires a haircut of 5% applied to the coll…
- Which of the following best describes how most corporate bonds are traded in the secondary market?
- Compared with a quote-driven dealer market, an order-driven electronic trading system for bonds is most likely to: