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Liquidity Measurement

Abstract

The definition of liquidity provided in Chapter 1 is crucial for the delimitation of this feature from other relevant characteristics of investment alternatives. However, it is still insufficient for the application in formal decision models — a more precise notion is needed for this purpose that would allow an unambiguous comparison of investment alternatives with respect to their grades of liquidity. Having to choose between two otherwise identical assets, a rational investor will prefer the more liquid one, but she has to be able to identify it. A quantitative measure of liquidity is, thus, inevitable if it is to be considered as a decision criterion. However, due to its multifaceted character, it is very difficult, if at all possible, to define a single ratio that would adequately encompass all aspects of this phenomenon. This part of the book summarizes and discusses different possible approaches.

Keywords

Real Estate Trading Volume Reservation Price Real Estate Market Market Maker 
These keywords were added by machine and not by the authors. This process is experimental and the keywords may be updated as the learning algorithm improves.

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