Distressed Securities and Liquidity Concerns

In one of the problems, they asked us to identify which strategy meets the following requirements.

low to moderate levels of leverage, idiosyncratic alpha, long-biased, and no concerns about liquidity.

The answer was distressed securities.

But how is there no concern of liquidity with distressed securities? I mean are they not typically highly illqiuid as it takes some time to regain the value of the company?

There is.

Sounds as though they got it wrong.

You should submit an erratum. Here’s the link.

1 Like

thank you. I will submit the request