What is liquidity?

What is Liquidity? Liquidity refers to the ease with which an asset, or security, can be converted into ready cash without affecting its market price . 1:39.

What is an example of an illiquid asset?

Rare books are an example of an illiquid asset. There are two main measures of liquidity: market liquidity and accounting liquidity. Market liquidity refers to the extent to which a market, such as a country's stock market or a city's real estate market, allows assets to be bought and sold at stable, transparent prices.

Is a market liquid or illiquid?

Some markets are highly liquid; some are relatively illiquid.” When a market is being traded regularly, liquidity is said to be high – it is liquid. This is because the volume of purchasers and vendors in that market create a free flow of trade, as there is always somebody around willing to buy or sell.

What does liquid mean?

a liquid state or quality. the ability or ease with which assets can be converted into cash. From the Latin word liquiditās, dating back to 1610–20. See liquid, -ity Dictionary.com Unabridged Based on the Random House Unabridged Dictionary, © Random House, Inc. 2023