Which of the following best defines liquidity?
A)It is the ease with which an asset is converted to the medium of exchange.
B)It is a measurement of the intrinsic value of commodity money.
C)It is the suitability of an asset to serve as a store of value.
D)It refers to how many times a dollar changes hands in a given year.

Question

Quizplus · Accepted Answer

Liquidity refers to the ease with which an asset can be converted into cash or the medium of exchange. Assets that can be easily bought or sold without affecting their price or disrupting the market are considered more liquid compared to assets that are harder to sell.

Which of the Following Best Defines Liquidity