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(a) Briefly explain why information asymmetry can widen the effective bid ask spread of a stock. (b) What is the main weakness of the Amihud
(a) Briefly explain why information asymmetry can widen the effective bid ask spread of a stock. (b) What is the main weakness of the Amihud measure of illiquidity when applied to corporate bonds? (c) If holding all else constant, asset As latent measure of liquidity is 50% and asset Bs latent measure of liquidity is 150%, which asset is more liquid? Briefly explain.
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