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#Liquidity101

Liquidity 101

Liquidity is a fundamental concept in finance that refers to the ease with which an asset can be converted into cash without significantly affecting its market value. It is critical for individuals, companies, and entire financial systems.

Here’s a breakdown of the liquidity concept:

What is liquidity?

Simply put, liquidity relates to how quickly and efficiently something can be turned into spendable cash.

* High liquidity: assets that can be quickly sold or exchanged for cash at or very near their market value. Examples include cash itself, money in a checking account, and heavily traded stocks.