Increasing market liquidity will reduce the value of control; an increasing value of control will reduce market liquidity and contribute to increasing liquidity discounts.

Question

Quizplus · Accepted Answer

Market liquidity refers to the ease and speed with which an asset can be bought or sold in the market without affecting its price. When market liquidity is high, investors can easily buy and sell without affecting the market price, which reduces the value of control. On the other hand, when the value of control is high, investors are less likely to sell their shares, reducing market liquidity and contributing to increasing liquidity discounts. Therefore, increasing market liquidity will reduce the value of control, and an increasing value of control will reduce market liquidity and contribute to increasing liquidity discounts.

Increasing Market Liquidity Will Reduce the Value of Control; an Increasing