1. What is liquidity in a market (not in a company or with an asset, but in a market)? Why do exchanges tend to be naturally occurring monopolies? Tell the story of how such a monopoly was broken in India by the National Stock Exchange.
In a market, liquidity refers to the forces of demand and supply and on how easy it is for individuals to enter the market and make transactions without making an impact on prices.
Exchanges tend to be natural monopolies because there are not many exchanges in every region, and a given exchange in a given region dominates the market. …
