Question: Market Liquidity. Answer the following questions:
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?