CFA Level I · CFA Level I Exam · Equity Instrument Features
Compared with public equity, private equity securities are most likely to have:
Private equity most likely has lower liquidity and less regulatory disclosure than public equity. Its securities do not trade on exchanges, so observable prices are scarce and investors must work harder and pay more to obtain and verify information about the issuer.
- Alower liquidity and less regulatory disclosureCorrect
- Bmore readily available market prices
- Clower information costs for investors
Explanation
Private equity is not traded on a public exchange, so it is less liquid, and issuers face fewer disclosure obligations. Market prices are not readily observable, and information costs for investors are higher, so the other options describe public equity.
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