Identify the basis on which you measure the liquidity of an asset.
A)Its value.
B)Its future earning potential.
C)Its convertibility into cash.
D)Its ability to act as a perfect store of value.

Question

Quizplus · Accepted Answer

Liquidity refers to the ease and speed with which an asset can be converted into cash without affecting its market value. Thus, the basis on which liquidity is measured is the asset's convertibility into cash. Options A, B, and D do not directly relate to a measure of liquidity.

Identify the Basis on Which You Measure the Liquidity of an Asset