A term used to describe an asset or security that cannot be easily and quickly sold or exchanged for cash without incurring a significant loss in value. Illiquid assets typically have low trading volumes and limited demand in the market. Selling an illiquid asset may require a longer time frame, and the seller might need to accept a lower price than the asset’s intrinsic value to find a buyer. Examples of illiquid assets include certain real estate properties, private equity investments, rare collectibles, and some types of bonds or loans. Investors should carefully consider the liquidity of assets when making investment decisions, as illiquidity can pose challenges in accessing funds when needed and may impact overall portfolio flexibility.
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