#Liquidity101

Liquidity is the ease of converting assets into cash without significantly affecting their price. Cash is the most liquid asset, while assets like real estate or machinery are considered less liquid. Understanding liquidity is essential in the financial world, as it affects the ability of individuals and companies to meet their financial obligations quickly. High liquidity means the ability to act quickly without significant losses, while low liquidity may indicate difficulty in selling or exiting an investment. In financial markets, liquidity reflects the ease of buying and selling securities. Liquidity is also important in crisis management and determining the strength of financial institutions.