liquidity risk

Liquidity Risk

The risk stemming from the lack of marketability of an investment that cannot be bought or sold quickly enough to prevent or minimize a loss.

Notes:

Usually reflected in a wide bid-ask spread or large price movements.

See also: Country Risk, Liquidity Cushion, Liquidity Risk, Political Risk, Price Risk, Reinvestment Risk, Risk, Risk Averse, Risk/Return Tradeoff, Spread, Systematic Risk, Unsystematic Risk

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Liquidity risk

The risk that arises from the difficulty of selling an asset in a timely manner. It can be thought of as the difference between the "true value" of the asset and the likely price, less commissions.

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liquidity risk

The risk of having difficulty in liquidating an investment position without taking a significant discount from current market value. Liquidity risk can be a significant problem with certain lightly traded securities such as unlisted options and municipal bonds that were part of small issues. Also called marketability risk.