Liquidity risk is defined as the risk of
A) having to trade a security in a broad market.
B) not being able to sell an investment conveniently and at a reasonable price.
C) having inflation erode the purchasing power of your investment.
D) having declining price levels affect the reinvestment rate of your current income stream.

Question

Quizplus · Accepted Answer

Liquidity risk refers to the difficulty of selling an investment quickly and at a price close to its market value. It highlights the potential loss or inconvenience that might arise from the inability to liquidate an asset easily without significant price concessions.

Liquidity Risk Is Defined as the Risk of