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impaired marketability. In other words, the additional discount
typical of unregistered private placements as compared to
registered private placements does not represent solely
compensation for impaired marketability but represents in part
compensation for the relatively higher assessment and anticipated
monitoring costs normally associated with unregistered issues.
Having concluded that factors unrelated to impaired
marketability play a variable role in the total discounts
observed in private placement transactions, Dr. Bajaj then
attempts to isolate the effect that impaired marketability has on
such total discounts. To that end, he adds a variable for stock
registration to variables representing the three additional
correlative factors and uses the statistical technique of
multivariate regression to determine the effect of each such
variable on the discounts observed in his sample of private
placements. He concludes from that analysis that, over the 1990
to 1995 period of his study, a private issue that was registered
(thereby allowing purchasers to immediately resell in the public
market) would have required a discount that was 7.23 percentage
points less than an otherwise identical issue (in terms of the
three additional correlative factors) that was unregistered.
c. Further Adjustments
Dr. Bajaj considers and rejects any additional adjustment
(discount) on account of the long-term impaired marketability of
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