Question

Which of the following methods of floatation of new issues is used by the company, when the company directly sells its securities to a limited number of sophisticated investors and at times does not want to disclose information to the open market?

Options

• Public Issue

• Rights Issue

• Private Placement

• Offer to the Employees

Answer 1

Private Placement

Explanation:

In private placement, a company directly sells its securities to a small number of selected or sophisticated investors (like financial institutions). It does not offer shares to the general public and avoids detailed public disclosure required in a public issue.