Question 1
In some markets it may take many months to sell a residential property. This is an example of
◦ business risk.
◦ credit risk.
◦ market risk.
◦ liquidity risk.
Question 2
Liquidity risk is defined as the risk of
◦ having to trade a security in a broad market.
◦ not being able to sell an investment conveniently and at a reasonable price.
◦ having inflation erode the purchasing power of your investment.
◦ having declining price levels affect the reinvestment rate of your current income stream.