The correct answer is C. The share of illiquid assets in institutional portfolios has generally gone up in the past 2 decades. This is due to the increasing interest of institutional investors like pensions and endowments in alternative assets, which have seen their holdings increase from about 5% to 20-25%. This shift towards illiquid assets is driven by the search for higher returns and diversification benefits that these assets can offer compared to traditional public markets. The other options are incorrect for the following reasons:

A is incorrect because municipal bonds, despite being considered relatively liquid compared to some other illiquid assets, have a turnover of less than 10%, which is significantly lower than the approximately 35% turnover for OTC equities.

B is incorrect as the statement that traditional public, liquid markets of stocks and bonds are larger than the total wealth held in illiquid assets is not accurate. In fact, the US real estate market, which is an example of an illiquid asset class, is quite large compared to the size of US stocks and bonds.

D is incorrect because during the 2008-2009 Financial Crisis, liquidity dried up in both the repo markets and commercial paper markets, contrary to the claim that liquidity was unaffected in commercial paper markets.