In business terms, Liquidity can be defined as how easily an investment can be exchanged for cash.
What is Liquidity?
Liquidity is the effectiveness at which an asset may be exchanged into immediate cash without influencing its market price.
It is also referred to as the extent to which an asset may be rapidly purchased or traded in the market at a price that reflects its intrinsic worth.
However, Cash is widely regarded as the most liquid asset since it can be transformed into various assets the most readily.
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