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Liquidity of a stock

This topic has 1 reply, 2 voices, and was last updated 8 years ago by John Moffat.

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April 2, 2017 at 10:32 pm #379951
syfar42
Member
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Is there a way to calculate the liquidity of a certain company’s stock? For example: How will we find whether A company’s stock is more liquid than B company’s stock?
I read that its the bid/ask spread but still not quite sure…
April 3, 2017 at 7:08 am #379966
John Moffat
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There is no ‘precise’ may of measuring it (and you could not be asked to produce a measure in the exam). However the bid/ask spread is an indicator. Generally the smaller the spread then the greater the liquidity, but it is not necessarily going to be the case always.
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