Question about the Liquidity Premium
How can the liquidity premium explain both why publicly traded stocks are valued higher than private stock, and why illiquid assets have higher returns?
In the technical questions guide, the liquidity premium is used to explain why a public company is worth more (liquidity and transparency).
However, in my classes I've also learned that illiquid assets (real estate, art, timber) give higher returns because they are difficult to offload.
So which is it?? Google is telling me both are the correct answer.
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