Liquidity risk is the risk that a counterparty in a trade fails to satisfy its obligation.

Name: Liquidity risk is the risk that a counterparty in a trade fails to satisfy its obligation.
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Liquidity risk refers to the risk that an entity will not be able to meet its financial obligations as they come due because it cannot convert assets to cash quickly enough or at a reasonable price. The risk you described is more accurately termed as "counterparty risk" or "credit risk."

Liquidity Risk Is the Risk That a Counterparty in a Trade