Liquidity

RECENT NEWS
The Times of India  Apr 11  Comment 
Banks have been cutting rates in the recent times as they want to use liquidity available with them, Finance Minister Arun Jaitley on Tuesday said in the Rajya Sabha as some parties, including ruling NDA, said demonetisation did not have positive...
The Economic Times  Apr 7  Comment 
Nifty may continue to see a modestly positive opening once again but do not expect any runaway rise. Some healthy consolidation now remains imminent.
The Hindu Business Line  Apr 6  Comment 
Last year, in the April policy, the RBI made substantial changes in liquidity management — moving from deficit to neutral liquidity
The Hindu Business Line  Apr 2  Comment 
Cash management bills (CMBs) help mop up excess money in the system
The Hindu Business Line  Mar 30  Comment 
Govt has assured exporters of fast refund of 90% of GST paid
The Economic Times  Mar 30  Comment 
The blue-chip CSI300 index fell 0.9 percent, to 3,436.76 points, while the Shanghai Composite Index lost 1 percent to 3,210.24 points.
The Economic Times  Mar 30  Comment 
According to Prime Database, 25 main-board IPOs came to the market in FY17, collectively raising Rs 28,211 crore with average IPO size being Rs 1,128 crore.
Forbes  Mar 29  Comment 
China’s money markets have experienced tightened liquidity on higher money market rates, reminiscent of the central bank-engineered liquidity crunch of 2013.
The Economic Times  Mar 28  Comment 
The blue-chip CSI300 index fell 0.2% to 3,469.81 points, while the Shanghai Composite Index lost 0.4 percent to 3,252.95.
The Economic Times  Mar 28  Comment 
China's blue-chip CSI300 index fell 0.2%, to 3,471.49 points by the lunch break




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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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