An ASSET, generally a security or real property that features a sharply reduced value as a result of actual or potential losses created by an excess of CREDIT RISK, MARKET RISK, or LIQUIDITY RISK. Securities, LOANS, or MORTGAGES of obligors that are at high risk of DEFAULT and those that contain significant amounts of LEVERAGE or ILLIQUIDITY may trade at deep discounts that are characteristic of distressed assets. VULTURE FUNDS and other sophisticated institutional investors periodically invest in such assets. See also FIRE SALE.
Written and fact checked by The Law Dictionary