Are treasury securities subject to liquidity risk?

One page of the CFAI materials suggests that treasury securities are subject to liquidity risk, but then another page says they have no liquidity risk. Of course, I know that treasury securities have no credit risk. anyone know?

They definitely have liquidity risk unless you plan to hold them until maturity. However, liquidity matters for money managers even if they plan on holding them until maturity because of marked to market.

thank you. That sounds correct!!! FYI …page 440, 2nd paragraph, volume 5 of the CFAI 2008 books states that on the run treasury securities have no credit risk and no liquidity risk. However, page 346 says the opposite.

NYLS Wrote: ------------------------------------------------------- > thank you. That sounds correct!!! > > FYI …page 440, 2nd paragraph, volume 5 of the > CFAI 2008 books states that on the run treasury > securities have no credit risk and no liquidity > risk. > > However, page 346 says the opposite. What does page 346 say? Off the run Treasuries will have some liquidity risk for sure.

floor_filler Wrote: ------------------------------------------------------- > They definitely have liquidity risk unless you > plan to hold them until maturity. However, > liquidity matters for money managers even if they > plan on holding them until maturity because of > marked to market. you don’t mark to market treasury securities - it’s an unrealized g/l when you price them out nightly, not a realized g/l

Page 346 states that one the run treasuries have different liquidity than off the run. That is all it says. Maybe for level 1 purposes, that is all you need to know. I am guessing it is expanded on for level 2 or 3.

On the run Treasuries are vastly more liquid than off the run Treasuries, a factor of 10 or more. Liquidity risk in treasuries is kind-of a relative thing. It’s not like owning some pink sheet stock or something.