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What happens to a firm’s marginal cost of capital as it expands in an illiquid market?...

What happens to a firm’s marginal cost of capital as it expands in an illiquid market? How can it overcome these difficulties?

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The marginal cost of capital stays flat for a longer range of raising new capital when the market experience a phase of illiquidity. From an organization perspective, an illiquid market is one in which it is difficult to raise new capital because there are insufficient buyers for a reasonably sized offering.

The companies can overcome these difcculties experienced in times of illiquid period by following a proactive strategy to internationalize their cost and availability of capital.

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