What do you understand by market liquidity?
Ans. Market liquidity means when large volumes of trade can take place without significant changes in prices of shares. In other words, when an investor is able to buy or sell shares at price near to market price of the shares, market is said to be liquid. It is indicated by turnover ratio, value added ratio and market capitalization ratio. Liquidity of an asset is different from liquidity of the market. A security is liquid when it is relatively easier to trade a large volume of it quickly without price concessions.
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