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 impact investing, liquidity can influence investment choices. An impact investor might note, 'We prioritize liquidity to remain agile and responsive to community needs.'

Practice Scenarios

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.

Investing

Scenario:

Our investment portfolio should ideally contain a suitable mix of both risky and safe assets.

Response:

Absolutely. Along with the risk, we should also consider the liquidity of assets while diversifying the portfolio.