What does it mean by liquid bond?

Question

Clarence · Accepted Answer

In finance, a liquid bond is a bond that can be easily bought or sold in the market with minimal impact on its price. Essentially, it means there's a healthy amount of trading activity for that specific bond, making it readily convertible to cash when needed. Conversely, an illiquid bond is one that is difficult to sell quickly without significantly lowering its price.

Danette · Answer

For bonds, liquidity is the investor’s ability to sell them in the secondary market at a reasonable price within a fair timeframe. Highly liquid bonds find buyers quickly without a steep discount, whereas illiquid bonds may require a steep discount and longer wait times to attract buyers.  As a general rule, G-secs are more liquid than corporate bonds. This is because G-secs are the safest debt instruments in the country, carrying sovereign guarantee.  Corporate bond liquidity is influenced by several factors, including the issuer’s creditworthiness, maturity, and changes in the bond yield resulting from fluctuations in the country’s interest rates.  Let’s examine whether bonds can be considered liquid assets and how corporate bonds fare on the liquidity spectrum. : Are Corporate Bonds Liquid?

What does it mean by liquid bond?

2 Answers

2 Answers

What does it mean by liquid bond?

2 Answers

2 Answers

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