a. Define what is meant by the term market liquidity. b. What are the main disadvantages for

Question:

a. Define what is meant by the term market liquidity.

b. What are the main disadvantages for a firm to be located in an illiquid market?

c. If a firm is limited to raising funds in its domestic capital market, what happens to its marginal cost of capital as it expands?

d. If a firm can raise funds abroad, what happens to its marginal cost of capital as it expands?

Cost Of Capital
Cost of capital refers to the opportunity cost of making a specific investment . Cost of capital (COC) is the rate of return that a firm must earn on its project investments to maintain its market value and attract funds. COC is the required rate of...