The article discusses how the ease of buying and selling assets, known as liquidity, affects their prices. Studies show that both the amount of liquidity and the risk involved in trading assets impact their prices significantly. This liquidity-based pricing helps explain various phenomena in finance, such as why some stocks have higher returns, why less liquid stocks have lower prices and higher expected returns, and why certain bonds and funds have different yields. Liquidity also helps solve puzzles in asset pricing, like why small companies have higher returns, why stocks have higher returns than safer investments, and why some securities are priced lower than similar ones.