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Introduction

Introduction

Illiquid refers to a stock, bond, or another asset that cannot be sold or exchanged for cash without suffering a significant loss in value. Illiquid assets can be difficult to sell rapidly due to limited trading activity or interest in the issue, as evidenced by a scarcity of ready and willing buyers or speculators to buy or sell the asset. Illiquid assets have smaller trading volumes, larger bid-ask spreads, and higher price volatility as a result.

The polar opposite of liquidity is illiquidity.

  • When security or another asset cannot be easily and rapidly sold or exchanged for cash without suffering a significant loss in value, it is said to be illiquid.

  • Due to a lack of ready and willing investors or speculators…

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