Definition, Meaning & Synonyms

liquidity

noun

/lɪkˈwɪdəti/

Definition

The availability of liquid assets to a market or company.

Examples

Investors prefer to hold assets with high liquidity, allowing them to quickly access their funds.
The liquidity of real estate is often lower compared to that of stocks.
During financial crises, maintaining liquidity is crucial for businesses to operate smoothly.

Meaning

In finance, liquidity refers to how easily an asset can be converted into cash without affecting its market price. A liquid market is characterized by a high volume of transactions and a quick turnover of assets.