#Liquidity101
š¹ What Is Liquidity?
Liquidity refers to how easily and quickly an asset can be bought or sold in the market without affecting its price too much.
š¦ Two Main Types of Liquidity:
1. Market Liquidity
Refers to how easily an asset can be traded.
Example: A stock like Apple (AAPL) or Bitcoin has high liquidity ā you can buy/sell quickly at stable prices.
Low-liquidity assets may take longer to sell and may require price discounts to attract buyers
2. Accounting Liquidity
Refers to how easily a person or company can convert assets to cash.
Example: Cash = highly liquid. Real estate = less liquid.
