Which three of the following are reasons for the valuation of unquoted shares being different from the valuation of quoted shares?
A) The shares may be subject to more risk.
B) The shares always have 'golden handcuffs' and 'earn- out clauses'.
C) There may be a lower quality and quantity of information.
D) The shares are less liquid.

Question

Quizplus · Accepted Answer

Unquoted shares are subject to more risk as compared to quoted shares. In addition, there may be a lower quality and quantity of information available for unquoted shares due to less transparency in financial reporting. Lastly, unquoted shares are less liquid and may have longer holding periods, leading to differences in valuation compared to more liquid quoted shares. However, the existence of "golden handcuffs" and "earn-out clauses" is not a universal characteristic of unquoted shares and is not a primary reason for differences in valuation.

Which Three of the Following Are Reasons for the Valuation