Business and Personal Finance Dictionary

# A B C D E F G H I J K L M N O P Q R S T U V W X Y Z 

• LIQUIDITY OPTION RISK
  
  The risk that actual cash flows will occur on dates or in amounts different from the contractual maturity dates and amounts. Put option risk includes the rights of saving, checking, and money market depositors to withdraw funds. It also includes the right of certificate of deposit (CD) holders to make early withdrawals. Call option risk includes the rights of line of credit borrowers to draw down on their committed lines of credit. One of the two types of liquidity contingency risk. See liquidity contingency risk and liquidity franchise risk.
  
  Back