afterworkguinness
Active Member
Malz lists causes of transaction liquidity risk, but I don't see how the factors he listed can affect the ability of buying or selling to move the price.
He lists:
Cost of trade processing
Inventory management by dealers
Adverse selection
Differences of opinion
Picking just one of these - adverse selection - how does a broker not knowing the reasoning behind a trade possible effect the endogenous liquidity?
I've read the source, but just don't see how these tie together.
He lists:
Cost of trade processing
Inventory management by dealers
Adverse selection
Differences of opinion
Picking just one of these - adverse selection - how does a broker not knowing the reasoning behind a trade possible effect the endogenous liquidity?
I've read the source, but just don't see how these tie together.
