Liquidity
A market is liquid when it has a high level of trading activity, allowing buying and selling with minimum price disturbance. Also a market characterized by the ability to buy and sell with relative ease. |
Similar financial terms
Liquidity risk on bondsThe primary measure of liquidity is the size of the bid-ask spread. Liquidity risk depends on the ease with which an issue can be sold at or near its value. It follows that the wider the dealer spread, the more liquidity risk.
Accounting liquidity
The ease and quickness with which assets can be converted into cash
Liquidity premium
The amount that forward interest rates exceed expected future spot interest rates.
Liquidity theory of the term structure
A biased expectations theory that asserts that the implied forward rates will not be a pure estimate of the market's expectations of future interest rates because they embody a liquidity premium.
Liquidity risk
The risk that arises from the difficulty of selling an asset. It can be thought of as the difference between the "true value" of the asset and the likely price, less commissions.
Liquidity ratios
Ratios that measure a firm's ability to meet its short-term financial obligations on time.
Liquidity preference hypothesis
The argument that greater liquidity is valuable, all else equal. Also, the theory that the forward rate exceeds expected future interest rates.
Liquidity diversification
Investing in a variety of maturities to reduce the price risk to which holding long bonds exposes the investor.
