Market and funding liquidity

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Market and funding liquidity. Suppose that you are considering buying a home, which you expect to live in for about 5 years, and, given the mobile workforce in the region, you also expect future buyers of the property to move relatively frequently. You find a house and an apartment which are equally attractive and consider which one to buy. (The house and apartment are equally attractive in the sense, for instance, that something similar could be rented at the same rates.)

a. Market liquidity. Suppose that the house is much more expensive to trade in terms of fees to the real estate agent, a longer expected waiting time when the property is on the market (and you may already have moved), and other costs. What would you pay more for, the house or the apartment? Explain your answer.

Reference no: EM133120117

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