What is the liquidity duration of stock XYZ assuming that the desired maximum daily volume is 20%, the daily volume of the security is 1,000, and the total number of shares for the security is 5,000? A. 50. B. 20. C. 5. D. 25.
For a given security, the liquidity duration can be calculated as follows: liquidity duration = number of shares of the security / (desired maximum daily volume × daily volume of the security). LD = 5,000 / (0.2 × 1,000) = 25.
