Illiquidity means that the investment trades infrequently / with low volume and that returns are difficult to observe due to lack of trading
Chapter 1 - What are the risks and advantages of illiquidity?
risk: illiquid assets can be difficult to sell advantage: higher returns
Chapter 1 - Define efficiency and inefficiency
efficiency refers to the tendency or market prices to reflect all available information. Inefficiency refers to the deviation of actual valuations from those valuations that would be anticipated in an efficient market
Chapter 1 - how are competition and transaction costs in inefficient markets?
competition are less transaction costs are higher
Chapter 1 - What are the structures causing nonnormal distributions?
securities structures and trading structures
Chapter 1 - How do you recognize nonnormal distributions?