1

The terms “liquidity” or “liquid market” or “liquid asset” refer to the ease – or otherwise – with which an investment or asset can be sold.

A liquid asset can be sold quickly, with minimal loss of value and typically this could refer to a stock or share traded on a major market.

The essential characteristic of a liquid market is that there are ready and willing buyers and sellers at all times.

An illiquid asset is an asset which is not readily saleable due to uncertainty about its value or the lack of a market in which it is regularly traded. The mortgage related assets, which resulted in the subprime mortgage crisis, are examples of illiquid assets, as their value is not readily determinable despite being secured by real property.

It is a feature of alternative investments that they have poor liquidity.

Category: A Guide to City Jargon

Trackbacks/Pingbacks

  1. Liquidity | greatbizinfo - February 24, 2014

    […] Read more … […]

Leave a Reply