Which bonds are the most illiquid?
(1) Corporate bonds issued through traditional private placement
(2) Corporate bonds issued through the SEC Rule 144A
(3) Corporate bonds issued through public offerings
(4) TIPS
Correct answer: (1) Corporate bonds issued through traditional private placement
Corporate bonds issued through traditional private placement do not trade on the secondary market thus it is most illiquid.
A illiquid bond refers to a bond which cannot be easily sold or exchanged for cash. When a bond is not listed on secondary market then it is very difficult for bond holder to sell the bond.
Hope it will help, please do comment if you need any further explanation. Your feedback would be highly appreciated.
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