Matching Definitions

(11) What is the definition of “Liquidity” in financial markets?

• (a) The process of converting assets into long-term investments.
• (b) The ease with which an asset can be quickly bought or sold without significantly affecting its price.
• (c) The total revenue generated by a company.
• (d) The amount of debt a company holds.

Answer

Correct Answer: (b) The ease with which an asset can be quickly bought or sold without significantly affecting its price.
Liquidity in financial markets refers to the ease with which an asset, such as a security or investment, can be quickly bought or sold in the market without causing a significant change in its price.