Liquidity is the same as
A) easy conversion of money to an asset, allowing for loss of value.
B) easy conversion of an asset to a means of payment, with little or no loss of value.
C) diversification of an investor's store of value.
D) easy conversion of an asset to a means of payment, allowing for loss of value.

Question

Quizplus · Accepted Answer

Liquidity refers to the ease with which an asset can be converted into cash or used to make a payment. Option B correctly defines liquidity as the ability to convert an asset to a means of payment with little or no loss of value. Option A, on the other hand, implies that loss of value is acceptable, which is not the case. Option C refers to diversification, which is not the same as liquidity. Option D describes a situation where loss of value is acceptable, which again is not correct.

Liquidity Is the Same as