BANKING AFFAIRS

Detailed explanation-1: -Many investments are highly liquid and can be bought and sold for a profit in a fraction of second. But real estate has very low liquidity. To encash the property, it takes weeks, months and years.

Detailed explanation-2: -Land and real estate investments are considered non-liquid assets because it can take months for a person or company to receive cash from the sale.

Detailed explanation-3: -While real estate is generally considered illiquid, liquid real estate properties are easier to buy and sell at the current market rate without trading at a discount. Today, market fluctuations and varying asset types all combine to create a wide spectrum of liquidity risk for investors.

Detailed explanation-4: -Role of liquidity in Investments Real estate investment comes with low risk and a higher return, but the liquidity aspect is compromised. Opting for stocks and equity mutual fund, in the long run, garners higher returns with liquidity, but this is accompanied by higher risks as well.

Detailed explanation-5: -Liquidity determines whether assets will be sold quickly or slowly and if the price will be above or below market value. Property that is easy to sell and purchased at market value is liquid. Conversely, assets that are harder to sell and transact for a discounted price are considered illiquid.