What is illiquidity risk?

For each operation, the investor is told that investing in bonds carries a illiquidity risk. Indeed, even though these bonds are freely transferable, there is no market place available to sell them easily. The investor will therefore have to find an investor willing to buy back his bonds.

In practice, this means that the investor, unless an external buyer can be found, will only be able to recover his or her capital at the redemption date specified in the bond contract.

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