n NISM Certifications
X NISM Series X
Medium

Is Mr. Suresh correct that illiquid investments generally generate higher returns?

Practice question from NISM Series XA- Investment Adviser (Level 1) Mock Test 7 — bank. The correct answer is highlighted below with a full explanation.

Options

  1. Yes, due to illiquidity premium

    Correct answer

  2. B

    Yes, because they are in blue-chip companies

  3. C

    No, because they are not high-growth

  4. D

    No, due to market discounts

Why this is the answer

Investors demand higher returns for holding assets that cannot be easily sold, compensating for liquidity risk.

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