What is Liquidity of Stock Market? Liquidity describes the extent to which an asset or security that can be quickly bought or sold in the market at a price that reflects its intrinsic value. In other words: the ease of turning it into cash. Cash is universally considered the most liquid asset, while tangible assets, such as real estate, fine arts, and collectibles, are all relatively illiquid. Other financial assets, ranging from equities to partnership units, fall in various places in the liquidity spectrum. Cash is considered a standard of liquidity because cash can be quickly and easily converted into other assets. If someone wants a $10,000.- refrigerators, cash is the easiest asset to get it. If the person does not have cash but a collection of rare books which has been valued at $10,000.-, he might not find someone who would exchange them for a refrigerator for their collection. Instead, he had to sell his collection and use cash to buy a refrigerator. That might be fine i...
Learning Site of Stock Investing and Stock Trading