Liquidity

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The Hindu Business Line  Jun 25  Comment 
The People's Bank of China said it will moderately increase short-term liquidity in the banking system through issuing reverse repos to stabilise market expectations, according to a statement on t...
The Hindu Business Line  Jun 24  Comment 
Chinese stocks extended gains on Wednesday, aided by liquidity unlocked from recent IPOs, as some investors took advantage of last week’s market collapse to buy relatively cheap shares. A...
Mondo Visione  Jun 18  Comment 
Liquidnet, the global institutional trading network, today announced that it is integrating with seven Order Management Systems (OMS) to provide direct connectivity into the first dark pool for corporate bonds which is scheduled to launch in Q3....
Financial Times  Jun 18  Comment 
Concerns exacerbated by widening mismatch at the heart of the market
MarketWatch  Jun 17  Comment 
Treasury Secretary Jacob Lew and key House Republicans sparred over whether federal regulation had made the bond market less safe for investors.
Financial Times  Jun 15  Comment 
Too many markets are crowded with buyers seeking refuge from zero-interest rate policies




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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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