Liquidity Risk: Refers to the difficulty of selling a security quickly without significantly affecting its price. This is common in thinly traded securities or complex instruments.
Other Risks:
Credit Risk: Relates to the possibility of default by the issuer.
Market Risk: Pertains to overall price changes due to market conditions.
Prepayment Risk: Associated with mortgage-backed securities and early repayment of loans.
References:
SEC Investor Bulletin on Risks: SEC Risk Guidance.
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