Liquidity Ratio

A measure of how much trading in a given stock has to happen for the price to change by 1%. The liquidity ratio is figured by adding up the daily percentage change in closing price for each trading day of the month, regardless of direction. This number is divided into the total dollar volume for the month. The higher the resulting number, the more liquid the stock, and thus the more attractive it becomes for conservative investors and institutions whose large trading might otherwise move the market too much.

 

 

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