liquid asset

Liquid asset

Asset that is easily and cheaply turned into cash-notably, cash itself and short-term securities.

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Liquidity

Easy convertibility into cash. A liquid asset or security can be easily bought or sold with little or no impact on price. Most methods of counting money supply include some highly liquid investments such as certificates of deposit. Liquid assets and investments are highly desirable as they may be sold to allow an investor to enter other investments as they arise. On exchanges, liquid investments usually have low bid-ask spreads. See also: Illiquid, Liquidity preference hypothesis.

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Liquid asset. Liquid assets are accounts or securities that can be easily converted to cash at little or no loss of value.

These include cash, money in bank accounts, money market mutual funds, and US Treasury bills.

Actively traded stocks, bonds, and mutual funds are liquid in the sense that they are easy to sell, but the price is not guaranteed and could be less than the amount you paid to buy the asset.

In contrast, selling fixed assets, such as real estate, usually requires time and negotiation.

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liquid asset

An asset that is cash or can be converted to cash on very short notice.