SIE practice questionmediumLiquidity risk
An investor trying to sell municipal bonds finds few buyers and must accept a much lower price. This is an example of:
- AMarket risk
- BCredit risk
- CLiquidity risk✓ Correct answer
- DInterest rate risk
Explanation
Why C — Liquidity risk
Liquidity risk is realized when a security cannot be easily sold at a fair price. Market, interest rate, and credit risks do not directly involve the ability to trade.
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