CFA Practice Question

There are 201 practice questions for this study session.

CFA Practice Question

Why is stock in private companies generally less liquid than otherwise similar interests in public companies?

I. Private companies typically have fewer shareholders.
II. Shares of a private company have not been registered for sale in the public stock markets.
III. There is limited number of existing and potential buyers.
A. I and II
B. II and III
C. I, II and III
Explanation: This is a negative factor in private company valuations.

User Contributed Comments 2

User Comment
LyncKidd Uber has no shortage of want-to-be investors.
DevanCFA I would argue that buyers exist, they are just less accessible. Point III doesn’t seem right to me.
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