Answer: Security A

The correct answer is A, Security A. This is determined by calculating the liquidity duration (LD) for each security, which is a measure of how long it would take to liquidate a position in a security given its average daily trading volume and the fund's holdings. The formula for liquidity duration is: \[ LD_i = \frac{Q_i}{(MDV_i \times V_i)} \] where: - \( Q_i \) is the number of shares held in security \( i \) - \( MDV_i \) is the maximum daily volume allowed for liquidation of security \( i \) (expressed as a percentage of average daily volume) - \( V_i \) is the average daily volume of security \( i \) The calculations for each security are as follows: - Security A: \( LD_A = \frac{500,000}{(22\% \times 522,000)} = 4.3539 \) days - Security B: \( LD_B = \frac{420,000}{(12\% \times 1,328,000)} = 2.6355 \) days - Security C: \( LD_C = \frac{256,000}{(18\% \times 710,000)} = 2.0031 \) days - Security D: \( LD_D = \frac{640,000}{(20\% \times 848,000)} = 3.7736 \) days Security A has the highest liquidity duration at 4.3539 days, indicating that it would take the longest to liquidate compared to the other securities listed. This is why Security A is the correct answer.

Author: LeetQuiz Editorial Team