#Liquidity101
Liquidity is a foundational concept in finance that describes how easily an asset can be bought or sold without causing a significant change in its price. It is essential for the smooth operation of markets and the financial health of businesses and investors alike.
Types of Liquidity
Market Liquidity: Refers to how easily an asset can be traded in the market without affecting its price. Highly liquid assets (like blue-chip stocks or government bonds) can be bought or sold in large quantities with minimal price impact.
Funding Liquidity: Concerns the ability of a company or institution to meet its short-term financial obligations with available cash or easily convertible assets. This is crucial for businesses to avoid insolvency and maintain operations.
