- when a security cannot be traded quick enough at a fair price
- weak marketability
- price inefficiency
- smaller the market value of security. larger the risk
Insolvency risk (=Bankruptcy risk)
- when an entity is unable to service its debt
- cannot meet current and future financial obligations
- smaller the cash flow, larger the risk
- also means "when liability exceeds assets on balance sheet"
sources:
http://financial-dictionary.thefreedictionary.com/Insolvency+Risk
http://en.wikipedia.org/wiki/Insolvency
http://en.wikipedia.org/wiki/Liquidity_risk
http://www.investopedia.com/terms/l/liquidityrisk.asp
