The liquidity of an asset is determined by

Question

Quizplus · Accepted Answer

Liquidity refers to the ease with which an asset can be converted into cash without price discounts or delays. The key factors determining the liquidity of an asset are the cost, convenience, and speed with which it can be converted into money. Therefore, option D is the correct answer. Option A refers to the role of central banks in monetary policy and does not relate to liquidity directly. Option B relates to the cost of storage but doesn't fully determine liquidity. Option C is true to some extent as potential value affects demand, but it is not the primary determinant of liquidity. Option E refers to the frequency of trade, which is somewhat related to liquidity, but liquidity itself refers to the ease of conversion to cash.

The Liquidity of an Asset Is Determined by