Liquidity is a measure of how quickly an investment can be sold for cash at a fair market price. If a fund can't sell an investment quickly, it may lose money or make a lower profit, especially if it has to meet a large number of redemption requests. In general, investments in smaller companies, smaller markets or certain sectors of the economy tend to be less liquid than other types of investments. The less liquid an investment, the more its value tends to fluctuate.
The risk that the Manager may have difficulty selling securities the Fund holds at the time it would like to sell, and at the value the Fund has placed on those securities.
The risk associated with transactions made in illiquid markets. Such markets are characterized by wide bid/offer spreads, lack of transparency and large movements in price after a deal of any size.
The risk a dealer has of not being able to unwind a position or enter into a position at a desired point of time.
(1) For a financial institution, the risk that not enough cash will be generated from either assets or liabilities to meet cash requirements. For a bank, cash requirements are primarily made up of deposit withdrawals or contractual loan fundings. One of six risks defined by the Federal Reserve and one of nine risks defined by the Office of the Comptroller of the Currency (OCC). The OCC defines liquidity risk as the risk to earnings and capital arising from a bank's inability to meet its obligations when they become due, without incurring unacceptable losses. The Federal Reserve uses a broad definition of liquidity risk as the potential that an institution (a) will be unable to meet its obligations as they come due because of an inability to liquidate assets or obtain adequate funding (referred to as "funding liquidity risk") or (b) cannot easily unwind or offset specific exposures without significantly lowering market prices because of inadequate market depth or market disruptions ("market liquidity risk").(2) For a security, the risk that not enough interested buyers will be available to permit a sale at or near the currently prevailing market price.
The risk that an enterprise will encounter difficulty in raising funds to meet commitments associated with financial instruments. Liquidity risk may also result from an inability to sell a financial asset quickly at close to its fair value.
The risk of not being able to liquidate an investment conveniently and at a reasonable price.
A form of investment risk whereby an investment may not be able to be sold at a time when cash is needed. Treasury Bonds, for example are publicly traded and have liquidity. Limited partnerships, on the other hand are often not publicly traded and may not have liquidity.
The risk that an asset (or security) cannot easily be converted into cash, which can lead to investment losses. Small capitalization stocks and stocks of companies in developing markets have limited marketability, which can make them difficult to sell — particularity during periods of economic uncertainty. For that reason, such stocks are considered to bear more liquidity risk than the stocks of larger companies in developed markets.
In banking, risk that a depository institution will not have sufficient cash or liquid assets to meet borrower and depositor demand.
The risk of being unable to meet financial commitments, under all circumstances, without having to raise funds at unreasonable prices or sell assets on a forced basis.
The risk that an asset cannot easily be converted into cash without a capital loss.
When there is no active trading market for specific types of securities, it can become more difficult to sell the securities at or near their perceived value. In such a market, the value of such securities and a fund's share price may fall dramatically. Investments in foreign securities tend to have greater exposure to liquidity risk than domestic securities.
The potential that an investor will be unable to convert its holdings into cash quickly and in large quantities without having to accept a substantial discount. The term also refers to the potential that a securities buyer will not have enough money to pay for the purchase.
The risk that an investor will not be able to buy or sell an investment quickly because buying and selling opportunities are limited.
The risk associated with the difficulty of quickly finding a willing buyer or seller for an asset.
Liquidity risk refers to the possible difficulties in selling (liquidating) large amounts of assets quickly, possibly in a situation where market conditions are also unfavorable, resulting in adverse price movements.
possibility that an investor will not be able to buy or sell a commodity or security quickly enough or in sufficient quantities because buying or selling opportunities are limited.
It is the risk in a fixed income security as well as in equities that these securities may not be sold in the market at close to their value. Liquidity risk is characteristic of narrow markets like India.
The risk that a party will not be able to have enough cash to meet its obligations as they come due.
The risk that there are no buyers for an instrument when the owner wishes to sell.
Describes the risk of being unable to meet current and future payment obligations either as they fall due or in the full amount due. The funding risk arises when the necessary liquidity cannot be obtained on the expected terms when required.
The risk associated with trying to close out a position. For stocks liquidity risk is normally small for small amounts of stocks. Real Estate or corporate bonds can have much more substantial liquidity risk which means you might have to accept a much lower price to attract a buyer in order to sell your investment when you wish to sell, or you will have to wait much longer to find a willing buyer.
Risk due to uncertain liquidity.
Liquidity risk is the risk of financial loss that could occur should the debt portfolio require restructuring. Liquidity is the ease with which one financial claim can be exchanged for another as a result of the willingness of third parties to transact in this debt. The Commonwealth faces liquidity risk with respect to transactions in existing debt such as debt repurchases prior to maturity.
The risk of not being able to execute a trade at the time you desire, or being forced to accept a significantly discounted price of a bond at the time you desire to sell.
The risk of not being able to sell an investment.
the risk that a firm unwinding a portfolio of illiquid instruments may have to sell them at less than their fair value. An illiquid market may be defined as one characterised by wide bid/ask spreads, lack of transparency and large movements in price after any sizeable deal.
The risk that the required financing is not available at a given price (interest rate) as the commitments fall due (e.g. if refinancing of securities or a loan is required).
The risk that a mutual fund's underlying securities cannot be sold at a fair price within a reasonable period of time. Shares in large blue-chip stocks are considered liquid because there are a large number of outstanding shares that are actively traded. Conversely, small-cap stocks with less outstanding shares are generally not considered liquid, since a few large buy or sell orders can greatly influence the share price.
The ease with which an investor can convert an investment to cash without negative impact on either capital or return.
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.
The risk that investment may not be convertible to cash without making price concessions.
The risk that funds will not be available for payments of liabilities without prematurely liquidating a security at a loss
It is the uncertainty introduced by the secondary market for an investment. Securities are first sold in the primary market and then all subsequent transactions take place in the secondary market.
In banking, risk that a depository institution will not have sufficient cash or liquid assets to meet the claims of depositors and other creditors.
the risk that a counterparty will not settle an obligation for full value when due, but on some unspecified date thereafter.
The risk that an investment may not be easily converted into cash with little or no loss of capital and with minimum delay.
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.
The risk that an issue will be illiquid and force an investor to take a loss if he attempts to sell the issue prior to maturity.
See funding and liquidity risk.
The chance that an asset will not easily be converted into cash with little or no loss of capital and minimum delay.
Risk from a lack of liquidity.
The cost of selling an illiquid asset that lacks a large market for buyers and sellers. Illiquid assets have larger bid/ask spreads, and any buying or selling usually triggers price movements.
The possibility that an investor may not be able to find a buyer within a reasonable time at a price that reasonably reflects the theoretical value of the asset.
Liquidity risk arises from situations in which a party interested in trading an asset cannot do it because nobody in the market wants to trade that asset. Liquidity risk becomes particularly important to parties who are about to hold or currently hold an asset, since it affects their ability to trade.