Liquidity is
A)the degree of uncertainty about the price of a financial asset.
B)the net flow of gold into the Bank of Canada.
C)the risk encountered by holding a financial asset.
D)the degree of stability of the banking system.
E)the property of being easily convertible into a means of payment without loss in value.

Question

Quizplus · Accepted Answer

Liquidity refers to the ease with which an asset can be converted into cash without a loss in value. This means that the asset can be readily used as a means of payment. Therefore, option E is the correct answer.

Liquidity Is