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Posted 7 months ago
Which of the following best defines liquidity?
Choose 1 answer:
(A) The ability to convert a store of value to cash
(B) Uncertainty about the value of an asset
(c) The expenses of negotiating and executing an exchange
(D) The amount that will be repaid at the end of a bond's term
(E) Investing in several different assets with unrelated risks
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Answer from Sia
Posted 7 months ago
Solution by Steps
step 1
Identify the correct definition of liquidity from the given options. Liquidity in financial terms refers to how quickly and easily an asset can be converted into cash without affecting its market price
step 2
Review the answer choices and select the one that matches the definition of liquidity
step 3
Answer choice A, "The ability to convert a store of value to cash", aligns with the definition of liquidity
Answer
A
Key Concept
Liquidity Definition
Explanation
Liquidity is the ease with which an asset can be converted into cash.
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