Assets are judged based on how liquid they are - Liquidity

Liquidity = The ABILITY to change a Financial Asset into CASH quickly

For example,
A home is NOT very liquid because it takes time to sell a house, which involves

  • getting it ready for sale,
  • assessing the value,
  • putting it up for sale,
  • and finding a buyer.

On the other hand,
Stocks are MORE liquid
-> as they can be easily sold and cash received from the sale.

Created: 2023-08-18 Tags: #literature e Link: Liquidation - Definition