Found 2 blog entries tagged as Liquidity.

Introduction

Introduction

Illiquid refers to a stock, bond, or another asset that cannot be sold or exchanged for cash without suffering a significant loss in value. Illiquid assets can be difficult to sell rapidly due to limited trading activity or interest in the issue, as evidenced by a scarcity of ready and willing buyers or speculators to buy or sell the asset. Illiquid assets have smaller trading volumes, larger bid-ask spreads, and higher price volatility as a result.

The polar opposite of liquidity is illiquidity.

  • When security or another asset cannot be easily and rapidly sold or exchanged for cash without suffering a significant loss in value, it is said to be illiquid.

  • Due to a lack of ready and willing investors or speculators…

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What Exactly Is Liquidity?

The efficiency or convenience with which an asset or security can be converted into immediate cash without influencing its market price is referred to as liquidity. Cash is the most liquid of all assets.

Important Takeaways

  • The ease with which an asset, or security, can be changed into immediate cash without impacting its market price is referred to as liquidity.
  • The most liquid asset is cash, while tangible assets are less liquid. Market liquidity and accounting liquidity are the two basic types of liquidity.
  • Liquidity is typically measured using current, quick, and cash ratios.

Liquidity: An Overview

To put it another way, liquidity refers to the ease with which an item can be bought or sold in the…

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