In which case would an asset be categorized as lumpy?

An asset is categorized as lumpy when it is not easily divisible and typically must be sold or acquired in specific quantities. This characteristic is important because it affects how the asset can be transacted in the market. For instance, real estate properties, large pieces of equipment, or large blocks of private equity shares often fall into this category. Investors may not be able to buy or sell just a small portion of these assets; instead, they need to deal with them in larger units.

The other options represent different asset characteristics. Freely traded assets and highly liquid stocks are typically divisible and can be transacted in smaller quantities without significant market impact. Assets with fluctuating returns may not be lumped together by size or divisibility, as they can exist in various forms that may or may not be lumpy. Hence, the identification of an asset as lumpy emphasizes its indivisibility and the requirement for trading in whole units.