Generally, the more liquid an asset is, the:
A) lower its purchasing power.
B) lower its rate of return.
C) higher its capacity to store value over time.
D) higher its rate of return.

Question

Quizplus · Accepted Answer

Liquidity refers to how quickly and easily an asset can be converted into cash without significantly affecting its price. Generally, the more liquid an asset is, the lower its rate of return. This is because investors are willing to accept a lower return for the convenience and lower risk associated with being able to quickly convert the asset into cash.

Generally, the More Liquid an Asset Is, The