Week 6 — Lectures 10 & 11, Reading 5
We're discussing the following for week 6: Lecture 10: Dealers and Liquid Security Markets Lecture NotesIntroduction to the Treynor model of the economics of the dealer function. Inventories absorb order flow mismatches. Market liquidity vs. funding liquidity. Matched book vs. gross exposure. Arbitrage and brings liquidity. Lecture 11: Banks and the Market for Liquidity Lecture …