#Liquidity101

Liquidity refers to how easily an asset can be quickly converted into cash without significantly affecting its price. Highly liquid assets, like stocks or money market instruments, can be sold rapidly at market value. Cash is considered the most liquid asset. In contrast, real estate or collectibles are less liquid, as they may take longer to sell and may not fetch their full value immediately. Liquidity is crucial for both individuals and businesses to meet short-term obligations. In financial markets, high liquidity ensures smoother trading and price stability, while low liquidity can lead to higher volatility and increased transaction costs.