Question

What is liquidity?

Answer 1

Liquidity refers to the ease and speed at which an asset can be bought or sold in the market without significantly affecting its price. Assets that are highly liquid can be quickly converted into cash without causing a significant impact on their price, while assets with low liquidity may take longer to sell and may incur a greater price impact.

Answer 2

Liquidity refers to how easily an asset or security can be bought or sold in the market without significantly affecting its price. Assets such as cash or stocks with high liquidity can be quickly bought or sold with minimal impact on their price, while assets like real estate or certain types of securities may have lower liquidity and can be harder to sell without affecting their price.