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Liquidity - long recognized as an important characteristic that affected asset values - is a priced factor and is defined as the ease and speed

Liquidity - long recognized as an important characteristic that affected asset values - is a priced factor and is defined as the ease and speed with which an asset can be sold at a fair market value.It is oftentimes measured or visualized by bid-ask spread data. Liquidity costs can be incorporated into the CAPM relationship where a perfectly liquid asset would entail no liquidity discount.

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