SIE practice questionmediumPrivate Equity - Liquidity
A major risk of private equity funds for investors is:
- AIlliquidity and long lock-up periods✓ Correct answer
- BDaily redemption at NAV
- CPublic trading on exchanges
- DUnderperformance compared to government bonds
Explanation
Why A — Illiquidity and long lock-up periods
Private equity investments are not easily converted to cash and often require multi-year commitments. B, C, and D mischaracterize private equity features.
Turn it into reps
Reading one answer is not the same as being ready
Lucky the Banker is a free practice app with 1,867+ SIE questions, weak-area tracking, and timed mock exams. No credit card, no paywall.
Spot an error in this question or explanation? Tell us — we fix these fast.
Related Investment Companies & Packaged Products questions
- A primary benefit of ETF intraday trading is:
- A typical equity REIT seeks to earn returns for investors by:
- Variable annuities are most suitable for:
- If an investor wishes to redeem units in a UIT prior to termination, they:
- The main tax benefit of 529 plan distributions used for qualified education expenses is:
- Which of the following is a key difference between ETFs and open-end mutual funds?
- A closed-end fund trades at a discount to its NAV. Which factor is least likely to explain this discount?
- A mutual fund is MOST suitable for an investor seeking: