The "Lockup" Problem Involved in Rebalancing Refers to the Problem

question 24

Multiple Choice

The "lockup" problem involved in rebalancing refers to the problem that:

• A) retirement accounts cannot be liquidated prior to retirement.
• B) trust accounts cannot be traded without incurring administrative costs.
• C) taxable accounts are subject to capital gains taxes if appreciated assets are sold.
• D) illiquid fixed income securities must be held until maturity.

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Definitions:

Enforceable

Capable of being executed or imposed as per law or agreement.

Verbal Offer

An offer made in spoken form rather than in writing, which may be binding depending on the context and jurisdiction.

Breach of Contract

Not adhering to any provision of a contract, both in written form or orally, without a legal rationale.

Invitation to Do Business

An offer or solicitation made by a business seeking to engage with potential clients or customers.