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.
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Liquidity
Date: 2010-03-13 07:05 pm (UTC)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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