Because investors in a new business venture cannot sell the investment easily,they might demand some form of extra compensation. This is known as
A) an illiquidity premium.
B) a break even charge.
C) adverse effect.
D) capital method.
E) terminal value.

Question

Quizplus · Accepted Answer

An illiquidity premium is a compensation demanded by investors in a new business venture because they cannot sell their investment easily. It is a premium paid on the investment to compensate for the lack of liquidity.

Because Investors in a New Business Venture Cannot Sell the Investment