liquidity risk
noun[CorU]
ukusFINANCE
thedegreeto which it may not bepossibletosellaninvestmenteasilyinorderto getcash:
Theselong-terminvestmentsmeanwe have ahigherliquidityrisk, but this is more thanoffsetby thehigheryield.
Examplesofliquidity risk
liquidity risk
Such risks are typically grouped into credit risk,liquidityrisk, market risk, and operational risk categories.
From
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Wikipedia
This example is from Wikipedia and may be reused under a CC BY-SA license.This reflects "counterparty credit risk premiums" in contrast to "liquidityriskpremiums".
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This example is from Wikipedia and may be reused under a CC BY-SA license.Here too, the higher theliquidityrisk, the higher the expected return on the asset or the lower is its price.
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This example is from Wikipedia and may be reused under a CC BY-SA license.Hence, asset prices are subject toliquidityriskand risk-averse investors naturally require higher expected return as compensation for this risk.
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Wikipedia
This example is from Wikipedia and may be reused under a CC BY-SA license.Liquidityriskbecomes particularly important to parties who are about to hold or currently hold an asset, since it affects their ability to trade.
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This example is from Wikipedia and may be reused under a CC BY-SA license.This is whyliquidityriskis usually found to be higher in emerging markets or low-volume markets.
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Wikipedia
This example is from Wikipedia and may be reused under a CC BY-SA license.Structuralliquidityrisk, sometimes called fundingliquidityrisk, is the risk associated with funding asset portfolios in the normal course of business.
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This example is from Wikipedia and may be reused under a CC BY-SA license.A position can be hedged against market risk but still entailliquidityrisk.
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Wikipedia
This example is from Wikipedia and may be reused under a CC BY-SA license.Liquidityriskalso tends to compound other risks.
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This example is from Wikipedia and may be reused under a CC BY-SA license.Manifestation ofliquidityriskis very different from a drop of price to zero.
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This example is from Wikipedia and may be reused under a CC BY-SA license.These examples are from corpora and from sources on the web. Any opinions in the examples do not represent the opinion of the Cambridge Dictionary editors or of Cambridge University Press or its licensors.