Illiquid
Illiquid is a financial term used to describe an asset or security that cannot be easily sold or exchanged for cash. It is the opposite of a liquid asset, which can be quickly converted into cash. Illiquid assets are often difficult to value and may be subject to restrictions on their sale or transfer. Examples of illiquid assets include real estate, artwork, and private company stock.
History of Illiquid
The concept of illiquidity has been around since the early days of finance. In the 18th century, the term was used to describe investments that could not be easily converted into cash. In the 19th century, the term was used to describe investments that were difficult to value due to their complexity or lack of marketability. Today, the term is used to describe any asset or security that cannot be easily sold or exchanged for cash.
Comparison of Liquid and Illiquid Assets
| Asset | Liquidity |
|---|---|
| Cash | High |
| Stocks | High |
| Bonds | High |
| Real Estate | Low |
| Artwork | Low |
| Private Company Stock | Low |
Summary
Illiquid is a financial term used to describe an asset or security that cannot be easily sold or exchanged for cash. It is the opposite of a liquid asset, which can be quickly converted into cash. Illiquid assets are often difficult to value and may be subject to restrictions on their sale or transfer. For more information about illiquid assets, you can visit websites such as Investopedia, The Balance, and Investing.com.
See Also
- Liquidity
- Liquid Asset
- Asset
- Security
- Cash Flow
- Cash Conversion Cycle
- Marketability
- Valuation
- Restriction
- Investment
