Series 79 practice questionmediumPrivate Placements
Why are registration rights often negotiated in a private placement?
- AInvestors want a path to future liquidity through resale registration or exchange offers✓ Correct answer
- BPrivate placements cannot close without a proxy vote
- CRegistration rights guarantee a fixed return
- DThey eliminate all transfer restrictions immediately at closing
Explanation
Why A — Investors want a path to future liquidity through resale registration or exchange offers
Investors want a path to future liquidity through resale registration or exchange offers Because privately placed securities are restricted, investors often seek contractual rights that improve exit flexibility later. Those rights can materially affect pricing and investor demand.
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