#Liquidity101 Liquidity refers to how easily an asset can be bought or sold without significantly affecting its price. Here's a breakdown
Key aspects
#liquidity101 Assets with high demand and trading volume tend to be more liquid.
Liquid assets can be traded without large price swings.
High trading volume indicates liquidity.
Types of liquidity
1. *Market liquidity Ability to buy/sell assets quickly without impacting prices.
2. *Funding liquidity*: Ability to meet financial obligations.
*Importance:*
1. *Risk management*: Liquid assets can be easily sold during market downturns.
2. *Investment flexibility*: Liquidity allows for quick responses to market opportunities.Highly liquid due to high trading volumes.
Less liquid due to longer sales processes.