#Liquidity101 Liquidity refers to how easily an asset can be converted into cash without losing value. Cash is the most liquid asset, while things like property or rare collectibles are less liquid because they take time to sell. In financial markets, high liquidity means it's easy to buy or sell assets quickly at stable prices. Low liquidity can lead to price swings and delays in transactions. For businesses, liquidity also means having enough cash or easily accessible resources to pay bills on time. Overall, liquidity is essential for smooth trading, strong financial health, and reducing risk in both markets and companies.