Charles T. McCord, Jr. and Mary S. McCord, Donors - Page 72

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          costs and, by extension, to private placement discounts:  (1) the           
          size of the private placement relative to the issuer’s total                
          shares outstanding, (2) the volatility of the issuer’s recent               
          economic performance, (3) the overall financial health of the               
          issuer, and (4) the size of the private placement in terms of               
          total proceeds.  Dr. Bajaj posits that the additional discount              
          observed in unregistered issues could be attributable solely to             
          impaired marketability only if those four additional factors were           
          present in equal measure among both registered and unregistered             
          private placements.                                                         
               Dr. Bajaj analyzes the effects of the four additional                  
          factors listed above and concludes that the first three (but not            
          the fourth) of those factors are systematically related to the              
          level of private placement discounts.  Specifically, he concludes           
          that, relatively speaking, a high ratio of privately placed                 
          shares to total shares of the issuer, high issuer volatility, and           
          weak financial health of the issuer tend to be indicative of                
          higher discounts.  Dr. Bajaj then demonstrates that, as compared            
          to registered private placements, unregistered private placements           
          tend to involve a higher percentage of the issuer’s total shares,           
          higher issuer volatility, and financially weaker issuers.  That             
          being the case, Dr. Bajaj concludes that the registered-                    
          unregistered private placement discount differential must be                
          attributable in part to those three factors rather than just                






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