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.
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