BANKING AFFAIRS

Detailed explanation-1: -Are CDs liquid investments? Traditional CDs are not liquid investments. This means, funds held in a CD cannot be accessed until the account term is reached. If you need to withdraw money from your CD prior to its maturity date, you will have to pay a penalty.

Detailed explanation-2: -Cash is the most liquid asset possible as it is already in the form of money. This includes physical cash, savings account balances, and checking account balances.

Detailed explanation-3: -The most common examples of non-liquid assets are equipment, real estate, vehicles, art, and collectibles. Ownership in non-publicly traded businesses could also be considered non-liquid. With these kinds of assets, the time to cash conversion is difficult to predict.

Detailed explanation-4: -In general, a money market account is more liquid than a CD. In fact, many CDs have early withdrawal penalties attached to them, while money markets do not. That said, a CD will often pay a higher interest rate, because of its illiquidity.