An asset's liquidity is determined by how readily the asset can be converted to an appropriate amount of cash.

Question

Quizplus · Accepted Answer

Asset liquidity refers to the ease of converting an asset into cash without causing a significant impact on the market price of the asset. The more easily an asset can be converted into cash without affecting its market value, the higher its liquidity. Therefore, an asset's liquidity is closely related to its ability to be converted into cash.

An Asset's Liquidity Is Determined by How Readily the Asset