liquidity

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Related to Liquid Markets: Illiquid Market, Illiquid Assets

Liquidity

In context of securities, a high level of trading activity, allowing buying and selling with minimum price disturbance. Also, a market characterized by the ability to buy and sell with relative ease.
In context of a corporation, the ability of the corporation to meet its short-term obligations. Measured with liquidity ratios like current ratio, quick ratio, and cash ratio.
Antithesis of illiquidity.

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.

liquidity

A large position in cash or in assets that are easily convertible to cash. High liquidity produces flexibility for a firm or an investor in a low-risk position, but it also tends to decrease profitability.

Liquidity.

If you can convert an asset to cash easily and quickly, with little or no loss of value, the asset has liquidity. For example, you can typically redeem shares in a money market mutual fund at $1 a share.

Similarly, you can cash in a certificate of deposit (CD) for at least the amount you put into it, although you may forfeit some or all of the interest you had expected to earn if you liquidate before the end of the CD's term.

The term liquidity is sometimes used to describe investments you can buy or sell easily. For example, you could sell several hundred shares of a blue chip stock by simply calling your broker, something that might not be possible if you wanted to sell real estate or collectibles.

The difference between liquidating cash-equivalent investments and securities like stock and bonds, however, is that securities constantly fluctuate in value. So while you may be able to sell them readily, you might sell for less than you paid to buy them if you sold when the price was down.

liquidity

the possession by a person or business of a stock of monetary assets which can be used directly to finance the purchase of goods and services and capital assets. See MONEY, MONEY SUPPLY.

liquidity

the extent to which an ASSET can be quickly and completely converted into CURRENCY (notes and coin) in order to be used as a means of payment. Monetary assets (see MONEY) are the most liquid since they are widely acceptable as a medium of exchange, while durable and highly specific assets, such as a machine, are the least liquid since such assets can be converted into money only after a willing buyer has been found and a money value placed on the asset.

liquidity

The ability of a person or company to readily and easily obtain cash from its assets in order to meet obligations or make purchases.

References in periodicals archive ?
Where fair value is readily determinable for some assets and liabilities by reference to highly liquid markets, the FASB may have achieved its objective of improved financial reporting as stated in the exposure draft.
"The regulatory changes allow the DFSA to attract additional market participants trading in and from the DIFC and this should be an incentive for more vibrant and liquid markets in the DIFC.
According to the Shell top executive, the main challenge that currently most occupies his part of the Shell group, which deals with European gas, power and environmental products marketing and trading, is the transition in parts of continental Europe to more liquid markets. He continues: "This requires us to adapt in a whole number of ways - speed of decision making with our customers, the need to offer new products, the need to respond to changes in regulatory regimes around gas storage and balancing."
"The activities of many companies were affected by the crisis, but in the more liquid markets, balance was found more easily and investors did not bear the risk of not being able to sell their securities," concluded Tzachev.
All of these dimensions of liquid markets take time to build.
"The US market is one of the world's largest and most liquid markets and I am very pleased to note the great interest shown for this bond by the investor base, including US investors," Volvo chief financial officer (CFO) Mikael Bratt said, adding the transaction will further improve the group's strong liquidity position and extend the maturity structure of its loan portfolio.
HE said the IMF, in implementing a new surveillance regime, must use clear analytics and make strong judgements on exchange rate policies, "particularly where currencies are not set by market forces in deep, liquid markets."
At the same time, investment yields for top quality unencumbered properties in the larger and more liquid markets will be under downward pressure.
These more liquid markets also allowed vastly increased movements of capital as the risks involved in transnational lending could also be hedged.
Highly liquid markets with various groups of investors are much more resilient to attempts by a single person or a group of persons to affect the pricing processes and, therefore, are much less prone to artificial volatility.
M2 EQUITYBITES-February 8, 2018-Templum to Acquire Liquid Markets Group Broker/Dealer Liquid M Capital
The Attorney-General also noted that investors are more willing to pay premiums for more liquid markets and that would lead to lower borrowing costs for Government and lower burdens on Fijian taxpayers.