CFA Level I · CFA Level I Exam · Equity Instrument Features
Compared with publicly traded equity, private equity securities are most likely to:
Private equity securities typically have lower liquidity and less available price information than public equity. They are not listed on exchanges, trade infrequently and negotiate privately, and face lighter disclosure rules. Continuous exchange pricing and heavy regulatory disclosure are characteristics of public equity instead.
- Ahave lower liquidity and less readily available price informationCorrect
- Bbe subject to more extensive regulatory disclosure requirements
- Chave market prices quoted continuously on an exchange
Explanation
Private equity is not listed on an exchange, so there is no continuous market price and transactions are infrequent, which makes it less liquid. Private firms also face lighter disclosure requirements than public companies, so the second option is reversed. Continuous exchange quotation is a feature of public equity.
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