Liquidity
A)is the best available measure of the riskiness of an asset.
B)is a characteristic of money, and of no other asset.
C)is the ease with which an asset can be exchanged for money.
D)was declining for many financial assets during the 1990s.

Question

Quizplus · Accepted Answer

Liquidity refers to the ease with which an asset can be converted to cash. Therefore, option C correctly defines liquidity. Options A and B are incorrect as liquidity is not a measure of riskiness and it applies to other assets besides money. Option D is incorrect as liquidity has been increasing in most financial markets in recent years.