Answer: Liquidity risk

**Explanation:** Liquidity risk refers to the risk that an asset cannot be sold quickly enough in the market to prevent a loss (or make the required profit) without making a significant price concession. This occurs when there is insufficient market depth or when market conditions make it difficult to execute trades at or near the current market price. **Key points:** - **Liquidity risk** involves the inability to buy or sell an asset without affecting its price significantly - **Solvency risk** refers to the risk that an entity cannot meet its long-term financial obligations - **Settlement risk** is the risk that one party fails to deliver securities or cash as agreed in a transaction When an investor must sell an asset quickly and accepts a lower price than the current market value to find a buyer, this is a classic example of liquidity risk. The price concession represents the cost of converting the asset to cash quickly.

Author: LeetQuiz .