An interesting question that gives of answers on several levels.
1) Liquidity is something that breaks up into component parts easily. 2) Liquidity is something which a lot of people will trade at a mutually agreed value. 3) Liquidity is not something which necessarily maintains its value. The value just has to be something which, at any particular point in time, a lot of people agree on. 4) Liquidity is not a constant. However, measuring liquidity is difficult. I'm not even sure if there's a liquidity index around. Although, if there is, I'm sure that there's a derivative based on it.
Liquidity
An interesting question that gives of answers on several levels.
1) Liquidity is something that breaks up into component parts easily.
2) Liquidity is something which a lot of people will trade at a mutually agreed value.
3) Liquidity is not something which necessarily maintains its value. The value just has to be something which, at any particular point in time, a lot of people agree on.
4) Liquidity is not a constant. However, measuring liquidity is difficult. I'm not even sure if there's a liquidity index around. Although, if there is, I'm sure that there's a derivative based on it.
PJ
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