liquid investment & finance definition
An
investment or asset that can be quickly converted into cash at a price that
closely resembles a fair market value. Treasury bills and widely-traded stocks
are examples of liquid investments. Real estate and private equity investments
are not liquid. A liquid market can accept
large sell or buy orders without causing an inordinate influence on price. Liquidity risk is an uncertainty that is created from the
inability to buy or sell an investment in a secondary market.
See liquid in Wall Street Words
- Of, relating to, or being an asset that may be bought or sold in a short period of time with relatively small price changes engendered by the transaction. A U.S. Treasury bill is an example of a very liquid asset. (Many issues of municipal bonds are not very liquid.) Compare illiquid 1.
- Of, relating to, or being an investment position in which most of the assets are in money or near money. This kind of position generally earns a relatively low return but allows the investor to take advantage of other investment opportunities.
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