#Luqidity101

Liquidity refers to how quickly and easily an asset can be converted into cash without significantly affecting its price. Cash is the most liquid asset, followed by cash equivalents like money market accounts and certificates of deposit. Marketable securities such as stocks and bonds are also considered liquid, while real estate and collectibles are less so due to longer selling times and potential price fluctuations. Liquidity is crucial for individuals and businesses to meet short-term obligations and avoid financial distress. It also plays a vital role in investment decisions, as highly liquid assets are easier to buy and sell, providing greater financial flexibility.