Marketability Risk

The variability of return caused by the commissions and price concessions associated with selling an illiquid asset. It is also called liquidity risk. Marketability is made up of two components: (1) the volume of securities that can be bought or sold in a short period of time without adversely affecting the price, and (2) the amount of time necessary to complete the sale of a given number of securities. Other things being equal, the less marketability a security, the lower its price or the higher its yield.