#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 and collectibles are less liquid. In financial markets, high liquidity means you can buy or sell assets quickly with minimal price changes. Low liquidity can lead to higher volatility and wider bid-ask spreads. For investors and businesses, managing liquidity ensures smooth operations and minimizes risk. Always assess the liquidity of an investment before committing capital—it impacts returns, flexibility, and risk exposure. Understanding liquidity is key to smart financial decisions.

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