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SIE: Risk & Portfolio Management
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?

  1. ACredit risk
  2. BLiquidity risk✓ Correct answer
  3. CInterest rate risk
  4. DBusiness risk
Explanation

Why BLiquidity 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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