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Basic Question 2 of 16
Investors in distressed securities are most likely to:
A. Be able to avoid liquidity risks.
B. Have positions similar to venture capital investments.
C. Profit through trading the securities in the secondary market.
D. Attempt to profit through investing in overvalued securities and selling short undervalued securities.
A. Be able to avoid liquidity risks.
B. Have positions similar to venture capital investments.
C. Profit through trading the securities in the secondary market.
D. Attempt to profit through investing in overvalued securities and selling short undervalued securities.
User Contributed Comments 2
| User | Comment |
|---|---|
| ankurwa10 | Essentially, they are in it for long run. Seek to profit from the value going up, which is going to happen if the underlying recovers. (pretty much like VCs nurturing a start up) |
| ascruggs92 | ^When you explain it that way it makes sense. It's weird to conceptualize at first though, because they may be making similarly risky investments, where they look and what they buy are on complete opposite sides of the spectrum ( i.e. VC's buy new unproven companies hoping for them to take off versus distressed investors buying failing companies at deep discounts to profit off liquidation or restructuring) |
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Lina
Learning Outcome Statements
explain features of private equity and its investment characteristics
CFA® 2024 Level I Curriculum, Volume 5, Module 3.