Date of Submission
Open Access Senior Thesis
Bachelor of Arts
2019 Hannah R. Berg
Liquidity risk is a large issue faced by mutual funds. Large funds typically trade in size, and these large sizes often have a significant impact on prices. My hypothesis is that large funds will not invest in illiquid assets as much as smaller funds due to the price sensitivity of illiquid assets. While this seems obvious, the results from this study are not in agreement with this hypothesis. My paper finds that as the illiquidity of a stock increases, so does the probability that a large fund invests in the stock.
Berg, Hannah, "Liquidity Risk and Mutual Fund Manager’s Stock Choice" (2019). CMC Senior Theses. 2089.