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An investor who purchases stock in a closely held corporation with a small number of outstanding shares should be MOST concerned about which of the following types of risks?A. ReinvestmentB. RegulatoryC. Interest-rateD. Liquidity

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Answer:

D) Liquidity

Step-by-step explanation:

A closely held corporation has a limited number of stockholders, that is why their shares are not frequently traded. An advantage of purchasing shares from a publicly traded corporation is that they are traded on a daily basis, and if the investor needs to sell his/her shares, it can be done fairly quickly (they are a fairly liquid investment). On the other hand, since the shares of a closely held corporation are not frequently traded, even though they might be listed on a stock exchange, it may take much longer to sell them which makes them an illiquid investment.

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