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Homework answers / question archive / Liquidity
Liquidity. Consider the relative liquidity of the following assets
1) A $5 bill
2) A share in publicly traded company
3) The funds in the money market account
4) Your house
Select the assets in order of their liquidity, from most liquid to least liquid.
From most liquid to least liquid:
1) A $5 bill. Cash is the ultimate in liquidity as it is the base for what you are trying to convert the other assets into.
3) The funds in the money market account. Can be converted easily into cash.
2) A share in publicly traded company. Shares can be sold on exchange market fairly easily to get cash.
4) Your house. It can take days or months to sell your house and possibly longer to receive the cash from it.