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Liquidity Premium Diminishing

Liquidity can be described as the ability to trade a large number of investments quickly, at low costs and when you want to.

Because it is a priced risk, liquidity and its associated price effects are an important aspect of financial markets.

In illiquid markets, such as the private equity market, discounts are large and pervasive. Publicly traded equity, however, is generally more liquid. As a result, it’s important to understand the size of the liquidity premium associated with publicly traded stocks, and whether it’s economically significant.

Read the rest of the article on ETF.com.

 

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