Liquidity Risk
Liquidity risk is the chance a company can’t meet its debt obligations due to insufficient cash or liquid assets. It also applies to financial instruments—like equity shares or commodity futures—indicating difficulty in buying or selling them without impacting price, due to low market activity. For companies, it signals potential financial distress; for securities, it reflects trading challenges. High liquidity risk means greater uncertainty in accessing funds or exiting positions, affecting stability and investor confidence in both corporate and market contexts.
Related Terms
Debentures
A debenture is an unsecured debt instrument issued by companies to raise long-term capital without...
Institutional Investor
An Institutional Investor is a legitimate term used to describe large organizations that invest substantial...
Fair Value
Fair value is the mutually agreeable price for a stock, product, or service, ensuring neither...
Hammer Candlestick Pattern
A Hammer Candlestick pattern occurs when a stock, commodity, or currency opens lower than its...
Averaging Down
Averaging down is an investment strategy where an investor buys additional shares of a stock...
Growth Stocks
Growth stocks are shares in companies expected to outpace the broader market, driven by robust...
