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Risky and *leveraged* investment strategies, particularly in illiquid derivatives can result in price *bust*.
(another question: is illiquid the same with non-liquid?)
2007-01-16 20:36:42 · 2 answers · asked by Anonymous in Education & Reference ➔ Words & Wordplay
yes illiquid is the same as non-liquid. "illiquid" means there are too few people buying or selling so although your investments are worth say $100000, it's only worth that on paper if your investment is illiquid (ie. no one wants to buy it.) Iraqi dinars for instance are very illiquid right now, lots of people are selling but no one is buying. It has a value (right US$1 would get you about 1,307 Iraqi dinars) so it's theoretically worth that much, but since it's illiquid, no one will buy it off you (so it's only worth that on paper.)
"Leverage" means using an investment as security for a loan. The loan money is then used to invest. Suppose you put up your house as security for a loan of say $10000 which you use to trade in derivatives. This means your leveraging your house equity. "Bust" is not a technical term, but it usually means losing a lot of money or having to file for bankruptcy.
2007-01-16 22:29:18 · answer #1 · answered by One 3 · 0⤊ 0⤋
Leveraged here means "ON THE TOP | Raised" with a lot of risks...
Bust must be a rise or increase..
2007-01-17 06:05:49 · answer #2 · answered by ALMIGHTY 3 · 0⤊ 0⤋