The risk that the price at which investors can actually transact differs from the quoted price in the market is called:
A) spread risk.
B) credit migration risk.
C) market liquidity risk.

Question

Quizplus · Accepted Answer

Market liquidity risk refers to the risk that an investor may not be able to buy or sell an investment quickly at the quoted price due to low trading activity or a lack of buyers/sellers in the market. This can lead to a difference between the quoted price and the actual transaction price. Spread risk usually refers to the difference between the bid and ask prices, while credit migration risk refers to the risk of a decrease in the credit rating of a borrower.

The Risk That the Price at Which Investors Can Actually