Question

Some companies cannot afford a public issue and choose to use private placement because ________.

• A. access to the primary market can be expensive on account of various mandatory and non-mandatory expenses
• B. SEBI registered brokers have to be appointed for the purpose of accepting applications
• C. securities are not issued directly to the public
• D. none of the above

Answer 1

The correct option is A access to the primary market can be expensive on account of various mandatory and non-mandatory expenses

Some companies cannot afford a public issue and choose to use private placement because access to the primary market can be expensive on account of various mandatory and non-mandatory expenses. The process of listing company's shares in stock exchange involves huge expenses.