ECONOMICS
SAVING AND INVESTING
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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The less liquid the investment, the less return
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The more liquid an investment, the less return
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The more liquid an investment, the more return
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None of these
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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 describes your ability to exchange an asset for cash. The easier it is to convert an asset into cash, the more liquid it is. And cash is generally considered the most liquid asset. Cash in a bank account or credit union account can be accessed quickly and easily, via a bank transfer or an ATM withdrawal.
Detailed explanation-3: -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-4: -Money market funds are the most liquid investment. In virtually all cases, they come with check-writing privileges.