Why liquidity matters in bonds?
Mar 29, 09:03

Many PSU and private sector bonds that were issued for retail investors have been listed and available in the exchanges for transaction. Typically, investors stay invested throughout the bond's tenure to earn a steady income. But liquidity is important in case you wish to exit prematurely. Another reason that calls for liquidity is when you buy bonds on the secondary market, either to hold till maturity or to exit at an opportune time. Here, we prefer bonds that are frequently traded. A high trading volume also results in better price discovery. You can get to know the daily traded volume of the bonds in the BSE and NSE websites.