Liquidity refers to the ease with which a financial security, such as a stock or bond, can be traded for cash without causing a significant change in its price. The more liquid a security is, the easier it is for investors to buy or sell it without affecting the market price, thus making it more attractive to investors.

Solved

Liquidity Refers to

Question 85

Multiple Choice

Liquidity refers to

A) the ease with a stock can be traded for a bond.
B) the ease with which a financial security can be traded for cash.
C) the number of times a dollar changes hands in the creation of GDP in an economy.
D) the number of shares of stock a corporation issues.

Correct Answer: