Investors value liquidity in an asset because
A)liquid assets tend to have high rates of return.
B)liquid assets incur lower selling costs.
C)liquid assets incur lower tax liabilities.
D)whereas liquid assets have high information costs, their low risk offsets this.

Question

Quizplus · Accepted Answer

Investors value liquidity in an asset because it incurs lower selling costs. When an asset is liquid, it can be easily converted into cash without incurring high costs, making it more attractive to investors. Additionally, liquid assets tend to be more easily traded, allowing investors to quickly buy and sell as needed. While liquid assets may not necessarily have high rates of return, they offer greater flexibility and accessibility, making them a valuable investment choice.

Investors Value Liquidity in an Asset Because