Liquidity is a concept that has made a lot of financial headlines in recent years, usually by springing nasty surprises on unsuspecting investors. For example, those who invested in Neil Woodford’s funds ran into trouble because his main fund held too many illiquid assets, leaving investors unable to withdraw their funds. And at various points over the last few years, investors in certain property funds have been left unable to withdraw their cash, again because the assets inside these funds are insufficiently liquid.
What is liquidity and why is it so important?
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Why are some assets more liquid than others?
Why can a lack of liquidity be bad?
How do you measure liquidity?
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