Illiquid


Illiquid
The state of a security or other asset that cannot easily be sold or exchanged for cash without a substantial loss in value. Illiquid assets also cannot be sold quickly because of a lack of ready and willing investors or speculators to purchase the asset. The lack of ready buyers also leads to larger discrepancies between the asking price (from the seller) and the bidding price (from a buyer) than would be found in an orderly market with daily trading activity.

Some examples of inherently illiquid assets include houses, cars, antiques, private company interests and some types of debt instruments. On the other end of the spectrum, most listed securities traded at major exchanges, such as stocks, funds, bonds and commodities are very liquid, and can be sold instantaneously during regular market hours at fair market price.

Illiquid securities carry higher risks than liquid ones; this becomes especially true during times of market turmoil when the ratio of buyers to sellers may be thrown out of balance. During these times, holders of illiquid securities may find themselves unable to unload them at all, or unable to do so without losing a lot of money.


Investment dictionary. . 2012.

Look at other dictionaries:

  • illiquid — illiquid:⇨zahlungsunfähig(1) illiquid→zahlungsunfähig …   Das Wörterbuch der Synonyme

  • Illiquid — (v. lat.), 1) nicht flüssig; 2) unklar, unberichtigt …   Pierer's Universal-Lexikon

  • Illiquīd — (neulat.), nicht flüssig; in der Rechtssprache soviel wie nicht fällig, unerwiesen, im Gegensatz zu liquid (s. d.) …   Meyers Großes Konversations-Lexikon

  • Illiquid — Illiquid, lat. deutsch, nicht flüssig; unklar, unerwiesen …   Herders Conversations-Lexikon

  • illiquid — USA Unable to be easily bought or sold in the market and therefore not easily converted into cash. Practical Law Dictionary. Glossary of UK, US and international legal terms. www.practicallaw.com. 2010 …   Law dictionary

  • illiquid — (adj.) 1690s, from IL (Cf. il ) not + LIQUID (Cf. liquid) in the financial sense …   Etymology dictionary

  • illiquid — [i lik′wid] adj. [< IN 2 + LIQUID] 1. not readily convertible into cash 2. characterized by an insufficiency of cash illiquidity [il΄i kwid′i tē] n …   English World dictionary

  • illiquid — In the context of finance. absence of cash flow needed to fulfill financial debts and meet obligations. In the context of investments, describes a lightly traded investment such as a stock or bond that is not easily converted into cash. Bloomberg …   Financial and business terms

  • illiquid — adjective Date: 1913 1. not being cash or readily convertible into cash < illiquid holdings > 2. deficient in liquid assets < an illiquid bank > • illiquidity noun …   New Collegiate Dictionary

  • illiquid — adjective lacking liquidity Investment in illiquid assets may prove to be a mistake if the market turns down. Ant: liquid …   Wiktionary