Liquidity
Definition
What is Liquidity?
The ease and speed with which an investmentAn asset or commitment of money made with the expectation of future income, growth, or both. can be converted into cash without a major price concessionA contractual right to build, operate, or collect revenue from an asset or service for a stated period..
Example in practice
How This Looks in Practice
A money market fundA mutual fund that invests mainly in short-term, relatively liquid instruments such as treasury bills and deposits. redeemable within a few business days is generally more liquid than direct propertyLand and buildings held for use, rent, development, or capital appreciation..
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Related Terms
Know Your Customer
The identity and due-diligence checks a financial institution performs before serving an investor.
Investor TermsRisk Profile
An assessment of an investor's ability and willingness to accept investment losses and uncertainty.
Investor TermsTime Horizon
The expected period before invested money will be needed.
Tax TermsWithholding Tax
Tax deducted at source from specified income payments before the recipient receives the balance.