Illiquid

Definition:

In the context of corporate finance, the absence of cash flow needed to fulfill financial debts and meet obligations. In the context of investments, describes a thinly traded investment such as a stock or bond that is not easily converted into cash. Illiquid securities have high transactions costs. Often the bid-ask spread is very wide.

Investing Essentials


Copyright © 2011 Campbell R. Harvey, Professor of Finance, Fuqua School of Business at Duke University

Term of the Day

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The part of a sales contract that indicates the point at which title and risk of loss of merchandise pass from the seller to the buyer. See: Incoterms.

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