Liquidity
Beginner Level
Global
Banking & Finance
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Definition
The ease with which an asset can be converted into cash without significantly affecting its price.
Detailed Explanation
Cash is the most liquid asset. Real estate is less liquid as selling takes time. Liquidity is crucial for meeting short-term obligations. Companies need working capital for operational liquidity.
Example
Stocks of large companies are highly liquid as they can be sold instantly on exchanges.
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