ECONOMICS
SAVING AND INVESTING
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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The ability to convert an asset to cash quickly
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A valuable asset which the lender can attach to satisfy the loan in case of default by the borrower
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Money paid regularly at a particular rate for the use of money spent
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Delaying the repayment of debt
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Detailed explanation-1: -Liquidity refers to the ease with which an asset, or security, can be converted into ready cash without affecting its market price. Cash is the most liquid of assets, while tangible items are less liquid. The two main types of liquidity include market liquidity and accounting liquidity.
Detailed explanation-2: -Liquidity definition Liquidity is a company’s ability to convert assets to cash or acquire cash-through a loan or money in the bank-to pay its short-term obligations or liabilities.
Detailed explanation-3: -Financial liquidity refers to how easily assets can be converted to ready cash without affecting its market price. Assets like stocks and bonds are very liquid and can be converted into cash within days.
Detailed explanation-4: -Answer and Explanation: Out of all the listed assets, the funds accumulated in a checking account are considered the most liquid asset since they can be easily converted into cash without incurring a great deal of time.
Detailed explanation-5: -An asset’s liquidity is a function of how easily it can be converted into cash. In corporate finance, liquid assets are those that can be used to pay off debts in a hurry. The most common examples of liquid assets are cash – on-hand or deposited in a bank – and marketable securities such as stocks and bonds.