#Liquidity101 #Liquidity101: Liquidity refers to how easily an asset can be converted into cash without affecting its market price. Cash is the most liquid asset, while real estate or collectibles are less liquid due to the time and effort needed to sell them. In financial markets, liquidity also means the ability to buy or sell assets quickly at stable prices. High liquidity reduces transaction costs and risk, which is why it’s crucial for both individuals and institutions. Businesses need liquidity to meet short-term obligations, and investors seek liquid markets for flexibility. Understanding liquidity is key to smart financial decision-making.