SIE Exam Question 623: Answer and Explanation

Question: 623

Which of the following is/are correct regarding liquidity and marketability?

(1) Liquidity is the ability to sell or redeem an investment quickly and at a known price without incurring a significant loss of principal.

(2) Marketability is the speed and ease with which an investment may be bought or sold.

• A. (1) only
• B. (2) only
• C. Both (1) and (2) are correct.
• D. Neither (1) or (2) are correct.

Correct Answer: C

Explanation:

Liquidity is the ability to sell or redeem an investment quickly and at a known price without incurring a significant loss of principal. Marketability is the speed and ease with which an investment may be bought or sold.