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Liquidity risk
Liquidity riskIn banking, risk that a depository institution will not have sufficient cash or liquid assets to meet borrower and depositor demand. RELATED TERMS-------------------------------------- Risk The possibility of loss; the amount that one may lose when investing. Will The written expression of a person's wishes as to how his property should be distributed by his executors. Cash The value of assets that can be converted into cash immediately, as reported by a company. Usually includes bank accounts and marketable securities, such as government bonds and banker's acceptances. Liquid Easily traded or converted to cash. SIMILAR TERMS-------------------------------------- LIQUEFIED NATURAL Gas Limited LIQUEFIED NATURAL Gas Limited is a large Australian company in the field of energy. Their Australian Stock Exchange (ASX) code is LNG. Liquid Easily traded or converted to cash. Liquid asset Cash or items which can readily be converted to cash. Liquid market A market with many bid and ask offers. The market is characterized by high liquidity, low spreads, and low volatility. Liquid yield option note (LYON) A zero coupon bond that is callable (by issuer), putable (by investor), and convertible. LYONs are synthetic products that are financially engineered by Merrill Lynch. Liquidate To sell personal assets in order to pay creditors. Liquidated damages Present in certain legal contracts, this provision allows for the payment of a specified sum should one of the parties be in breach of contract. Liquidating dividend Payment by a firm to its owners from capital rather than from earnings. Liquidation 1) When a business or firm is terminated or bankrupt, its assets are sold and the proceeds pay creditors. 2) Any transaction that offsets or closes out a long or short position. Liquidation by assignment Sale or realization of a debtor firm's assets voluntarily agreed to by its creditors who estimate that the firm's liquidation value exceeds its going-concern value. Liquidation or receivership-winding up The compulsory sale of the assets of a bankrupt company. Liquidation rights The rights of a firm's security holders in the event the firm liquidates. Liquidation value A balance sheet concept that represents the amount of money that could be realized by breaking up the company, selling its assets, repaying its debt, and distributing the remainder to its stockowners. Liquidation World Liquidation World is one of Canada's largest companies. Liquidator An official appointed to supervise the liquidation of a company. Liquidator or administrator Person appointed by a court who realizes (turns into cash) a company's assets in order to repay creditors. Liquidity The degree to which assets of a company or an investment can easily be sold or converted into cash. Liquidity diversification Investing in a variety of maturities to reduce the price risk to which holding long bonds exposes the investor. Liquidity preference The public's demand for money in cash or current bank accounts; money which is saved rather than spent or lent. 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 premium Forward rate minus expected future short-term interest rate. Liquidity ratios Ratios that measure a firm's ability to meet its short-term financial obligations on time, such as the ratio of current assets to current liabilities. 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. Liquor Stores Income Fund Liquor Stores Income Fund is one of Canada's largest companies. PREVIOUS AND NEXT TERMS-------------------------------------- Liquidity diversification Investing in a variety of maturities to reduce the price risk to which holding long bonds exposes the investor. Liquidity preference The public's demand for money in cash or current bank accounts; money which is saved rather than spent or lent. 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 premium Forward rate minus expected future short-term interest rate. Liquidity ratios Ratios that measure a firm's ability to meet its short-term financial obligations on time, such as the ratio of current assets to current liabilities. Liquidity risk 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. Lisbon Stock Exchange (LSE) Stock exchange trading stocks, bonds, and unit trusts. The BVL general index is the exchange's official index. List price The manufacturer's or wholesaler's recommended price, before any discounts or special reductions are offered. Listed firm A company whose stock is traded on a leading stock exchange such as the London Stock Exchange or New York Stock Exchange. Listed option An option that has been accepted for trading on an exchange. We thank you for using the Financial Dictionary to search for Liquidity risk. If you have a better definition for Liquidity risk than the one presented here, please let us know by making use of the suggest a term option. This definition of Liquidity risk may be disputed by other professionals. Our attempt is to provide easy definitions on Liquidity risk and any other medical topic for the public at large.
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