What Is Liquidity Risk?
The risk that an investment cannot be quickly sold at or near market price due to low trading volume or market disruption; affects an investor's ability to access cash. Series 66 candidates must assess liquidity risk when recommending illiquid securities and matching investments to client time horizons.
Liquidity Risk across 2 exams
Liquidity Risk appears on the following exams. Each defines it in the context candidates are tested on:
- Series 66
- The risk that an investment cannot be quickly sold at or near market price due to low trading volume or market disruption; affects an investor's ability to access cash. Series 66 candidates must assess liquidity risk when recommending illiquid securities and matching investments to client time horizons.
- Series 57
- The risk that a trader cannot quickly buy or sell a security at current market prices due to insufficient trading volume or wide bid-ask spreads. Less liquid securities are harder to exit quickly.