liquidity risk

(redirected from Marketability Risks)

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.

Liquidity Risk

The risk that an individual or firm will have difficulty selling an asset without incurring a loss. That is, there may be a lack of interest in the market for a particular asset, forcing the owner to sell it for less than its actual value. Liquidity risk may be quantified as the difference between an asset's value and the price at which it can likely be sold. It is highest for lightly traded securities and small issues, as well as during a bear market.

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.
References in periodicals archive ?
Resultantly, market reluctance occurs due to perceived liability, insurability and marketability risks (Bartke, 2010).
In the last decade, controversial discussions increasingly focused on enhancing the appraisers' capabilities to assess marketability risks through methodologies such as sample surveys and market interviews (e.g.
Stigma and marketability risks: Even if all authority requirements for use and private claims are met, properties with a history of contamination will still have a battered image.
The rating is limited by project execution and marketability risks related to the firm's real estate projects, the service said.