definitions Liquidity


The ability of an asset to be converted into cash without a significant price concession. The capacity to turn assets into cash, or the amount of assets in a portfolio that have that capacity. Cash itself (i.e., money) is the most liquid asset. The ability to readily exchange an asset for goods or other assets at a known price, thereby facilitating economic transactions. It is usually measured by the difference between the rates at which the dealers can buy and sell that asset. The ease with which an asset can be exchanged for another asset of equal value.