liquidity vs liquidity premium

kamkam
in CIA.IFRS17-DR

hi, in wiki, under section 4.2.2.3, it states that: "low inherent value increases liquidity (and the liquidity premium)"

But in battle card #7 in mini quiz 3, it says "an increase in liquidity lower liquidity premium"

They seem contradictory so I'm confused about the relationship between liquidity and liquidity premium. Could you explain?

Thanks!

Comments

  • Staff-T1Staff-T1
    Basically the more liquid you are, the lower your liquidity premium. Put it another way, liquidity is the ease in which you can sell or trade an asset/liability. The more liquid you are, the lower the illiquidity premium. But you are right - the phrase (and the liquidity premium) makes things confusing. I'll reword it
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