Market liquidity, exchanges and ETFs
Date Submitted: 09/10/2006 03:49:25
Category: / Law & Government / Military
Length: 2 pages (565 words)
Category: / Law & Government / Military
Length: 2 pages (565 words)
1. What is liquidity in a market (not in a company or with an asset, but in a market)? Why do exchanges tend to be naturally occurring monopolies? Tell the story of how such a monopoly was broken in India by the National Stock Exchange.
In a market, liquidity refers to the forces of demand and supply and on how easy it is for individuals to enter the market and make transactions without making an impact …
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…have several stocks and therefore diversification minimizes the risk of loss. ETF's are ideal for people who don't want to deal or don't understand when to buy or sell stock and how to diversify their investment. Fund managers are free to sell or buy stocks once the ETF has been approved. Investors can check on their ETF's at any time and gain fees on them, as well as the fund owners and the custodial bank.
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