liquidity

Vocabulary Word

Definition

'Liquidity' is all about how fast you can make your assets, like your house, car, or jewelry, into cash. The quicker you can do this without losing value, the more liquid the asset is.

Examples in Different Contexts

In the art market, liquidity can vary widely. A gallery owner might say, 'This artist’s works have high liquidity because they’re in demand and sell quickly.'

Practice Scenarios

Banking

Scenario:

It is important that our bank stays prepared to honour all our customers' withdrawal requests at any time.

Response:

Yes, it's crucial to maintain adequate liquidity to gain the trust of our customers and meet their financial needs.

Business

Scenario:

Given our upcoming debt repayments, it's crucial for us to maintain a steady cash flow.

Response:

Agreed, maintaining liquidity is crucial to meet our financial commitments on time.