West Loop Financial LLCIgnore Liquidity At Your Peril – West Loop Financial LLC https://www.westloopfinancial.com Evolutionize Site Wed, 19 Aug 2020 20:50:49 +0000 en-US hourly 1 https://wordpress.org/?v=5.1.22 Ignore Liquidity At Your Peril https://www.westloopfinancial.com/2015/12/14/ignore-liquidity-at-your-peril/ https://www.westloopfinancial.com/2015/12/14/ignore-liquidity-at-your-peril/#respond Mon, 14 Dec 2015 09:00:32 +0000 http://evolvemypractice.com/?p=2425 Liquidity is valuable to investors. Therefore, investors demand higher expected returns for less liquid stocks. The liquidity of an asset market refers to the ability of investors to buy and sell significant quantities of that asset, quickly, at low cost and without a major price concession. Thus, liquidity risk can be thought of as the...

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]]> Liquidity is valuable to investors. Therefore, investors demand higher expected returns for less liquid stocks. The liquidity of an asset market refers to the ability of investors to buy and sell significant quantities of that asset, quickly, at low cost and without a major price concession.

Thus, liquidity risk can be thought of as the risk to investors that an investment cannot be bought or sold quickly enough to prevent or minimize a loss. The size of the bid/offer spread and the amount of daily volume are frequently used as measures, or indicators, of liquidity risk.

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