SIE practice questionhardLiquidity risk
A real estate investment trust (REIT) holds properties in a market with few buyers. In a downturn, investors may be unable to sell shares at a fair value, demonstrating which risk?
- ACredit risk
- BLiquidity risk✓ Correct answer
- CInterest rate risk
- DBusiness risk
Explanation
Why B — Liquidity risk
Lack of buyers makes it hard to sell without substantial price reductions, which is liquidity risk. The other risks do not describe difficulties in selling assets.
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