Liquidity

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The Australian  Aug 17  Comment 
Copper and zinc miner MMG is stepping up studies of a rights issue to increase liquidity and pay down debt.
The Economic Times  Aug 15  Comment 
Among global factors, the minutes of the US Federal Reserve’s latest policy meeting late on Wednesday will be a key point to watch out for this week.
The Economic Times  Aug 13  Comment 
Friday’s closing of the market formed a strong bullish candle, which indicated further upside. Traders should trail their stops on long positions below 8,500.
The Economic Times  Aug 11  Comment 
At times, the inter-bank call money rate was about 40-50 basis points higher than the policy rate, now at 6.50%. This prevented banks from fully passing on the central bank’s reduction in the policy rate.
Wall Street Journal  Aug 8  Comment 
Finance chiefs have made few changes to their cash policies, even in the face of new SEC rules that will greatly reduce the attractiveness of prime money-market funds come mid-October.
Mondo Visione  Aug 5  Comment 
The Board of the International Organization of Securities Commissions (IOSCO) is seeking public comment on its consultation report entitled Examination of Liquidity of the Secondary Corporate Bond Markets, which was published today.  IOSCO...




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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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