IFIC Mutual Funds Licensing Practice Exam · Question
A client holds an investment in a specialized private equity fund focused on unique, unregistered infrastructure projects. They inquire about the ease of selling their units if they suddenly needed to access cash for an emergency. What specific risk should an advisor highlight regarding this type of investment?
Liquidity risk is the risk that an investment cannot be bought or sold quickly enough in the market without substantially affecting its price, or at all. Privat
Start free practice for IFIC Mutual Funds Licensing Practice Exam
355 questions · no signup required · 40 free questions per day
Question: A client holds an investment in a specialized private equity fund focused on unique, unregistered infrastructure projects. They inquire about the ease of selling their units if they suddenly needed to access cash for an emergency. What specific risk should an advisor highlight regarding this type of investment?
Answer options: ✅ Liquidity Risk
- Currency Risk
- Credit Risk
- Inflation Risk
Correct answer: Liquidity Risk
Explanation: Liquidity risk is the risk that an investment cannot be bought or sold quickly enough in the market without substantially affecting its price, or at all. Private equity funds and unregistered investments often have limited or no secondary market, making them illiquid.
Start free practice for IFIC Mutual Funds Licensing Practice Exam
355 questions · no signup required · 40 free questions per day
More about IFIC Mutual Funds Licensing Practice Exam
More for IFIC Mutual Funds Licensing Practice Exam candidates
Ready to practice?
Free, no signup required. Build a wrong-question list as you go.
Start Free IFIC Mutual Funds Licensing Practice Exam Practice →Related courses
Other Canadian certifications candidates often prepare for alongside this one.