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.         CONCEPT C H E C K ☞ QUESTION 1 Why does it make sense for shelf registration to be limited in time?     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 in- stitutional or wealthy investors. Private placements can be far cheaper than public offer- ings. This is because Rule 144A of the SEC allows corporations to make these placements without preparing the extensive and costly registration statements required of a public of- fering. 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- ments do not trade in secondary markets such as stock exchanges. This greatly reduces their liquidity and presumably reduces the prices that investors will pay for the issue.             SOLUTIONS TO CONCEPT C H E C K S 1. NAV $105,496 $844 $135.33 773.3 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 (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.