#Liquidity101 Liquidity 101: Fundamentals of Liquidity

Liquidity is the ability to convert assets into cash quickly and without significant loss in value. Liquid assets include cash and checking accounts, while illiquid assets like real estate take time to sell. Liquidity is important for individuals and businesses as it ensures the ability to meet immediate financial obligations. In financial markets, liquidity refers to the ease of buying and selling assets such as stocks without significantly affecting the price. The more buyers and sellers there are, the greater the liquidity. Understanding liquidity is essential for achieving financial stability and avoiding crises resulting from cash shortages or difficulties in liquidating assets.