New And Enhanced Pedagogy

This book contains several features designed to make it easy for the student to understand, absorb, and apply the concepts and techniques presented.

Concept Check

'A unique feature of this book is the inclusion of Concept Checks in the body of the text. These self-test question and problems enable the student to determine whether he or she has understood the preceding material. Detailed solutions are provided at the end of each chapter.

Private Placements

Primary offerings can also be sold in a private placement rather than a public offering. In this case, the firm (using an investment banker) sells shares directly to a small group of institutional or wealthy investors. Private placements can be far cheaper than public offerings/This is because Rule 144Aof the SEC allows corporations to make these placements without preparing the extensive and costly registration statements required of a public offering. On the other hand, because private placements are not made available to the general public, they generally will be less suited for very large offerings. Moreover, private place-ents do not trade in secondary markets such as stock exchanges. This greatly reduces heir liquidity and presumably reduces the prices that investors will pay for the issue.

773.3

2. The net investment in the Class A shares after the 4% commission is $9,600. If the fund earns a 10% return, the investment will grow after n years to $9,600 X (1.10)n. The Class B shares have no front-end load. However, the net return to the investor after 12b-1 fees will be only 9.5%. In addition, there is a back-end load that reduces the sales proceeds by a percentage equal to (5 - years until sale) until the fifth year, when the back-end load expires.

SOLUTIONS TO CONCEPT CHECKS

i- Current Event Boxes

Short articles from business periodicals are included in boxes throughout the text. The

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