Financial Terms and Definitions_ Why is Accessible Cash Called 'Liquid'_ What is an Example of a...
3
6/2/2016 Financial Terms and Definitions: Why is accessible cash called 'liquid'? What is an example of a nonliquid asset? Quora https://www.quora.com/FinancialTermsandDefinitionsWhyisaccessiblecashcalledliquidWhatisanexampleofanonliquidasset 1/3 Financial Terms and Definitions: Why is accessible cash called "liquid"? What is an example of a nonliquid asset? finance In short, liquidity equates to convertibility. Cash is highly liquid because you can convert it to practically anything (a car, an appliance, etc.) in a very short period of time. Nonliquid assets can't be converted from one form to another quickly. Illiquid stocks, real estate are generally illiquid all the time. But the key to keep in mind is the ability/speed to convert from one asset to another and in times of crisis, liquidity changes. Related Questions More Answers Below What is a "gap" in financial terms? How should a person decide what portion of his/her assets should be kept liquid? What is the definition of "liquid assets"? What financial terms should everyone know? Which are liquid assets? What is a "gap" in financial terms? How should a person decide what portion of his/her assets should be kept liquid? What is the definition of "liquid assets"? What financial terms should everyone know? Which are liquid assets? Why is gold known as 'liquid assets'? Why is gold liquid asset? Which 2 financial assets have perfect 0 correlation? What assets are considered liquid? What billionaires have the highest amount of cash or liquid assets? Financial Terms and Definitions Assets Etymology Word Definitions, Terminology, and Jargon Answer Wiki 5 Answers Cash is "liquid" because it can flow anywhere everyone accepts cash. A "nonliquid" asset is any asset that you can't immediately dispose of (sell) for cash, e.g. real estate, equity (shares of stock) in a nonpublicly traded company, a long term loan that you can't sell to some other lender. The harder it is (the longer it takes) to convert a given asset to cash by selling it, the less "liquid" that asset is said to be. Updated 6 Apr 2015 • View Upvotes Erik Fair, Software Engineer, Investor, skier. 21.6k Views • Most Viewed Writer in Financial Terms and Definitions Liquidity simply refers to the relative ease and speed with which an asset can be converted into a medium of exchange. Money (i.e. cash) is the most liquid asset of all because it is the most common medium of exchange; it does not have to be converted into anything else in order to make purchases. Other noncash assets involve transaction costs (i.e. friction costs) when they are converted to money. For example, when you sell a home, you have to pay a brokerage commission and there is some time period between when you list the home to when you receive money upon the sale of the home. The same is true for when you sell assets such as stocks, bonds, precious metals, hedge funds, etc. – all examples of illiquid assets. Transaction costs and the time that it takes to convert the asset from its current form into money define its degree of liquidity. Written 15 Jul 2011 • View Upvotes Brad Matthews, President at Innobanc, Inc. 9k Views Cash is liquid because as the meaning states: Liquidity is the ability to turn an asset to cash in a short amount of time at market value. Nonliquid asset would could be anything from a tv to a house to a car (it all depends on the perspective on the cashrestricted seller). You can turn each into cash in a day if you Stephen Alred Jr., CEO of Ignite Financial 4.2k Views Related Questions
-
Upload
abd-aziz-mohamed -
Category
Documents
-
view
216 -
download
1
description
Financial Terms and Definitions_ Why is Accessible Cash Called 'Liquid'_ What is an Example of a Non-liquid Asset_
Transcript of Financial Terms and Definitions_ Why is Accessible Cash Called 'Liquid'_ What is an Example of a...
6/2/2016 Financial Terms and Definitions: Why is accessible cash called 'liquid'? What is an example of a nonliquid asset? Quora
https://www.quora.com/FinancialTermsandDefinitionsWhyisaccessiblecashcalledliquidWhatisanexampleofanonliquidasset 1/3
Financial Terms and Definitions: Why is accessible cashcalled "liquid"? What is an example of a nonliquidasset?finance
In short, liquidity equates to convertibility. Cash is highly liquid because you can convert it topractically anything (a car, an appliance, etc.) in a very short period of time.
Nonliquid assets can't be converted from one form to another quickly. Illiquid stocks, realestate are generally illiquid all the time. But the key to keep in mind is the ability/speed toconvert from one asset to another and in times of crisis, liquidity changes.
Related QuestionsMore Answers Below
What is a "gap" in financial terms?
How should a person decide what portion of his/her assets should be kept liquid?
What is the definition of "liquid assets"?
What financial terms should everyone know?
Which are liquid assets?
What is a "gap" in financial terms?
How should a person decide what portion of his/herassets should be kept liquid?
What is the definition of "liquid assets"?
What financial terms should everyone know?
Which are liquid assets?
Why is gold known as 'liquid assets'?
Why is gold liquid asset?
Which 2 financial assets have perfect 0 correlation?
What assets are considered liquid?
What billionaires have the highest amount of cash orliquid assets?
Financial Terms and Definitions Assets Etymology
Word Definitions, Terminology, and Jargon
Answer Wiki
5 Answers
Cash is "liquid" because it can flow anywhere everyone accepts cash.
A "nonliquid" asset is any asset that you can't immediately dispose of (sell) for cash, e.g.real estate, equity (shares of stock) in a nonpublicly traded company, a long term loanthat you can't sell to some other lender. The harder it is (the longer it takes) to convert agiven asset to cash by selling it, the less "liquid" that asset is said to be.
Updated 6 Apr 2015 • View Upvotes
Erik Fair, Software Engineer, Investor, skier.21.6k Views • Most Viewed Writer in Financial Terms and Definitions
Liquidity simply refers to the relative ease and speed with which an asset can be convertedinto a medium of exchange. Money (i.e. cash) is the most liquid asset of all because it is themost common medium of exchange; it does not have to be converted into anything else inorder to make purchases.
Other noncash assets involve transaction costs (i.e. friction costs) when they are convertedto money. For example, when you sell a home, you have to pay a brokerage commissionand there is some time period between when you list the home to when you receive moneyupon the sale of the home. The same is true for when you sell assets such as stocks, bonds,precious metals, hedge funds, etc. – all examples of illiquid assets. Transaction costs andthe time that it takes to convert the asset from its current form into money define its degreeof liquidity.
Written 15 Jul 2011 • View Upvotes
Brad Matthews, President at Innobanc, Inc.9k Views
Cash is liquid because as the meaning states: Liquidity is the ability to turn an asset to cashin a short amount of time at market value.
Nonliquid asset would could be anything from a tv to a house to a car (it all depends onthe perspective on the cashrestricted seller). You can turn each into cash in a day if you
Stephen Alred Jr., CEO of Ignite Financial4.2k Views
Related Questions
6/2/2016 Financial Terms and Definitions: Why is accessible cash called 'liquid'? What is an example of a nonliquid asset? Quora
https://www.quora.com/FinancialTermsandDefinitionsWhyisaccessiblecashcalledliquidWhatisanexampleofanonliquidasset 2/3
Related Questions
Why is gold known as 'liquid assets'?
Why is gold liquid asset?
Which 2 financial assets have perfect 0 correlation?
What assets are considered liquid?
What billionaires have the highest amount of cash or liquid assets?
What does consolidation mean in financial terms?
What is revenue, deficit, fiscal, assets, liability, liquidity, debentures, shares, equity?
What is the definition of "cash operating cost"?
From where does the term "liquid assets" originate?
What are some real life examples of asset liquidation arbitrage?
Why do institutional investors hold liquid assets?
In terms of liquid assets, what is the value of assets held by the United States federalgovernment and is it greater than the debt?
What are the differences between liquid assets and hard assets?
What is the definition of Liquidation put simply?
What is the most liquid asset and why?
sold for $1. However, they would be significantly lower than market value and you wouldin turn lose money.
Written 20 Jan 2011 • View Upvotes
I would provide you with a very basic definition. On the basis of that definition you caneasily identify liquid and non liquid assets by your own,
A liquid asset is one which can be converted in to cash easily on a short notice withoutlosing value. All those assets which do have these three fundamental characteristics aretermed as liquid assets. Examples include current account, savings account, marketablesecurities etc.
Remember all financial instruments are not liquid such as long term bonds, term depositsetc.
Now why cash is liquid or in other words what is the purpose of liquidity? The answer iscash is money. money is a medium of exchange. So with money you can buy goods andservices. You cannot buy them with a car or a bungalow. This is why individuals,companies and governments need to be liquid. we do not live in a barter world where youcan exchange goods for goods. This is the basic purpose of liquidity.
Written 15 Jul 2012 • View Upvotes
Syed Ali5k Views
conversion to cash is called liquidity . I liquid asset is one which you can convert to cashand hence are free to use. A non liquid asset could be real estate . If you want to sell yourhouse ricght away you may not have a buyer / right price and thus the liquidity is missingin this case
The term liquidity is relative . A liquid asset may become illiquid and vice versa dependingupon the numbers of buyers/ sellers at a given moment of time.
Written 7 Jun 2015
Anurag Butoliya1.9k Views
Top Stories
What are the positive effects ofgun control?
Kevin Baker, Studied the topic since1995. If they gave a PhD in it, I'd haveone.
If you can read Chinese, can youalso read Japanese?
James Alexander Smith, CEOSchoolshape
What American leftwing (liberal orprogressive) ideas are completelyridiculous? Why?
Anderson Moorer, Autodidact
Sign InSearch for questions, people, and topics
6/2/2016 Financial Terms and Definitions: Why is accessible cash called 'liquid'? What is an example of a nonliquid asset? Quora
https://www.quora.com/FinancialTermsandDefinitionsWhyisaccessiblecashcalledliquidWhatisanexampleofanonliquidasset 3/3
Sitemap # A B C D E F G H I J K L M N O P Q R S T U V W X Y Z
About Careers Privacy Terms Contact
Well, after passage of New York's SAFE Act,firearminvolved violence is up there: NYPDreveals increase in homicides and gunviolence in NYC But that's more of acausation/correlation argument. The onlystatistically significant "positive effect" I am
2.1k Views • Upvoted by Chris Everett,gun owner, extensive knowledge intechnical and legal issues related to guns.and John Fogh, Professional FirearmsInstructorKevin has 210+ answers in Guns andFirearms
In short... no. However, much Japanese textwill use characters called Kanji which are
11.7k Views
The idea that one can both have openborders and open entitlements whichinclude free healthcare, education, foodassistance etc without an endless influx ofimmigrants and eventual systemic collapse.
602 Views
Read More Read More Read More
