Liquidity

RECENT NEWS
Reuters  Jun 10  Comment 
A move by four Arab states to blacklist dozens of figures with alleged links to Qatar could squeeze liquidity at Qatari banks which get a significant amount of their funding from the region.
Mondo Visione  Jun 8  Comment 
The Financial Industry Regulatory Authority (FINRA) Office of the Chief Economist today posted a new Research Note on liquidity in structured products, complementing an earlier report on corporate-bond liquidity. The new analysis focused...
SeekingAlpha  Jun 8  Comment 
The Economic Times  Jun 6  Comment 
The RBI is still grappling with more than $60 billion in excess liquidity after the government’s crackdown on high-denomination notes last year.
The Economic Times  Jun 2  Comment 
CSI300 index fell 0.3 per cent to 3,486.51 points, while the Shanghai Composite Index added 0.1 per cent to 3,105.54.
The Economic Times  Jun 2  Comment 
Tightened yuan liquidity in Hong Kong had pushed the offshore yuan spot rate to a high of 6.7245 per dollar.
Mondo Visione  Jun 1  Comment 
Bats, a CBOE Holdings, Inc. company, and a leading global operator of exchanges and services for financial markets, today announced that its Bats ETF Implied Liquidity Feed is now available for use on Money.Net platforms. Money.Net, the innovative...
Channel News Asia  May 31  Comment 
A lack of liquidity is keeping U.S.-based mutual fund managers from investing in bitcoin even as the digital currency hits record highs.




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Liquidity

Liquidity is defined as the ability to trade large size quickly at a low cost. It is one of the most important characteristics of a market. A liquid market allows traders to implement their strategies cheaply, normally with a limited bid/ask spread. A liquid market is characterized by high volume. It is generally less volatile than an illiquid market.

Usually, you can refer to three dimensions of liquidity - time, size and cost:

• “Immediacy” refers to how quickly you can execute a trade of a given size at a given cost.

• Width refers to the cost of executing a trade of a given size, including commissions.

• Depth refers to the size of a trade that can be executed at a given cost. Width and depth are very strictly related.

A liquid market is a market where you can trade large size quickly at low cost. Liquidity refers to how quickly you can convert your assets into cash. [1] Liquidation is the conversion of assets into cash by an Investor getting rid of a position in a particular type of security. [2]

For example, a portfolio manager might decide to liquidate a position in a stock by selling all the shares of that stock held in the portfolio. [3]

1610s, from liquidus. [1] Liquid Financial sense of "capable of being converted to cash" is first recorded 1818. [2]

References

  1. Stock Investing for Dummies‬ By Paul Mladjenovic pg22 ISBN-10: 0470401141
  2. Wall Street Words: An A to Z Guide to Investment Terms for Today's Investor by David L. Scott Accounting Professor ISBN-10: 0618176519 pg 212
  3. Wall Street Words: An A to Z Guide to Investment Terms for Today's Investor by David L. Scott. Copyright © 2003 by Houghton Mifflin Company. Published by Houghton Mifflin Company. ISBN-10: 0618176519 pg212

4. http://www.bestcashloans.org.uk/

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