JMF Capstone Wealth ManagementLiquidity Key Price Factor – JMF Capstone Wealth Management https://www.jmfcapstone.com An Alabama registered investment advisor Fri, 21 Nov 2025 19:30:19 +0000 en-US hourly 1 https://wordpress.org/?v=5.1.22 Liquidity Key Price Factor https://www.jmfcapstone.com/2016/04/04/liquidity-key-price-factor/ https://www.jmfcapstone.com/2016/04/04/liquidity-key-price-factor/#respond Mon, 04 Apr 2016 09:00:31 +0000 http://evolvemypractice.com/?p=2696 Liquidity—the ability to buy and sell significant quantities of a given asset, quickly, at low cost and without a major price concession—is valuable to investors. Therefore, they demand a premium as compensation for the greater risks and costs of investing in less liquid securities. For example, liquidity risk partly explains the equity-risk premium. The average...

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]]> Liquidity—the ability to buy and sell significant quantities of a given asset, quickly, at low cost and without a major price concession—is valuable to investors. Therefore, they demand a premium as compensation for the greater risks and costs of investing in less liquid securities.

For example, liquidity risk partly explains the equity-risk premium. The average transaction costs on stock trades are far larger than they are on Treasury bills, which can be traded in large blocks of tens of millions of dollars in a single transaction without affecting their price.

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