Risk Terms
Liquidity Risk
Definition
What is Liquidity Risk?
The risk that an asset cannot be sold quickly at a reasonable price or a redemptionThe process of selling fund units back to the fund in exchange for cash. cannot be met promptly.
Example in practice
How This Looks in Practice
A fund faces heavy redemptions while some holdings have few willing buyers.
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Related Terms
Risk Terms
Market Risk
The possibility of loss because broad market prices or rates move against an investment.
Risk TermsCredit Risk
The possibility that a borrower or issuer will fail to make promised payments or suffer a downgrade.
Risk TermsInterest-Rate Risk
The possibility that changing market interest rates will reduce an investment's value or income appeal.
MiscellaneousBusiness Day
A day on which relevant financial institutions and markets are open for normal processing.