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What Is the Liquidity Premium?

By Lee SamahaUpdated Feb 26, 2025 at 3:11 PM

Key Points

  • Liquidity premium demands higher returns for assets harder to sell quickly at fair prices.
  • Investors might accept lower yields on liquid assets than illiquid ones, impacting pricing.
  • Understanding liquidity premiums aids in evaluating similar assets and making investment choices.

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