illiquidity

Meanings

• noun

  The condition of being unable to sell an asset without significant loss in value or without incurring an unreasonable cost.

  - "The illiquidity of the market for rare coins makes it difficult for collectors to sell their collections quickly."
  - "The illiquidity of the company's stocks caused investors to panic and sell off their holdings."

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Variants

List of all variants of illiquidity that leads to same result
illiquid , illiquidities , illiquidity

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Etymology

origin and the way in which meanings have changed throughout history.

From the Latin word 'liquidus' meaning 'liquid' or 'fluid', illiquidity refers to the state of being not liquid or not easily converted into cash.

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Trivia

Any details, considerations, events or pieces of information regarding the word

1. Illiquidity is often measured using various metrics such as bid-ask spreads, trading volumes, and market depth.

2. Illiquid markets can be particularly problematic during times of market stress or financial crises, when investors may need to sell their holdings quickly.

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Related Concepts

informations on related concepts or terms closely associated with the word. Discuss semantic fields or domains that the word belongs to

1. Liquidity Risk: The risk that an investor will not be able to sell an asset or security quickly enough to meet contractual obligations or to realize a profit due to a lack of buyers or unfavorable market conditions.

2. Market Liquidity: The degree to which securities can be bought and sold in the market without significantly affecting the price.

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Culture

Any cultural, historical, or symbolic significance of the word. Explore how the word has been used in literature, art, music, or other forms of expression.

Illiquidity is a common issue in various financial markets, particularly in markets for less frequently traded securities. It can lead to market inefficiencies and create risks for investors.

How to Memorize "illiquidity"

1. visualize
   

   - Imagine a stock market where it takes a long time to find a buyer for your shares, and the price keeps dropping as you wait. This is the essence of illiquidity.

2. associate
   

   - Think of illiquidity as the opposite of liquidity. Just as a liquid substance can be easily poured and moved, a liquid market allows for easy buying and selling of securities.

3. mnemonics
   

   - Remember the I in illiquidity stands for 'inability' - the inability to sell an asset quickly or at a fair price.

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