Stock Liquidation Liquidity Definition

Below please find a definition of “Stock Liquidation Liquidity”

Financial Analysis Training & Glossary TermsStock Liquidation Liquidity: Any transaction that offsets or closes out a long or short position. Liquidity and liquidation are very important factors to consider while analyzing investments made by hedge funds.

Often hedge funds have lock-up periods or minimum commitments which only allows for investor redemption of capital after a 3, 6 or 12 month period of time. This is because many types of assets which hedge funds sometimes invest in are not very liquid, they can be very hard to sell and large losses can be incurred if you must sell at the wrong time when there is no market for the sell order.

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