Liquidity

Liquid assets are assets that can easily be converted into cash whenever you need them. Cash or a savings account are both good examples of liquid assets. However, in investing terms, market liquidity refers to whether or not assets can be easily sold or purchased. Basically, you’re looking for high market liquidity if you need to buy and sell fast.

Example: Ford Motor has been known to trade hundreds of millions of stocks on the market daily, meaning that those who buy and sell Ford stocks are able to easily convert them into cash without affecting the overall market value too much.

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