The risk stemming from the lack of marketability of an
investment that cannot be bought or sold quickly enough to
prevent or minimize a loss.
Related term: Market risk
Liquidity risk may arise due to liquidity of the assets held to meet
the cash flow requirements (commonly referred to as asset, market,
or trading liquidity risk), but also due to insufficient funds being
available to meet cash flow requirements (funding liquidity risk).
From a more theoretical point of view liquidity risk on a day-today
basis could also be understood as a change in value due to a
deviation of the actual cash flow requirements from the expected
cash flow requirements, being the cost of being over- or under
capitalist