Discounting [36]

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Bullet points include: Is liquidity a single ‘universal’ market factor that some instruments have more of and some have less of E.g. does represent length of time it might take to transact at approximately mid price in a given instrument in a given size Illiquidity in assets and liabilities ought then partially to net off against each other: both are travelling in the same direction along the time axis Or is it market or instrument specific, deriving from uncertainty in the instrument’s own bid/offer spread? Illiquidity in assets and liabilities may not net off, indeed may be additive In a forced unwind situation would need to sell assets and buy back liabilities

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