Imagine you're thirsty and you have an ice-cube. You can't drink an ice-cube, but if it melts into water, you can drink it. That's 'liquidity' - how quick and easy it is to turn something into cashmoney in physical form.
'Liquidity' is all about how fast you can make your assetsthings one owns, like your house, car, or jewelry, into cash. The quicker you can do this without losing valueless worth, the more liquid the asset is.
'Liquidity' refers to the ability of an asset or investmentact of using money to gain profit to be converted into cash quickly without affecting its market pricecost at which item is traded. Higher liquidity typically indicates a more stable and safe investmentact of using money to gain profit as it ensures easy access to funds when needed.
Context
Business
In economics, 'liquidity' is often associated with money marketssection of the financial market where short-term funds are loaned and borrowed and the ease of converting assets. An economist might say, 'The liquidity of the bond marketenvironment where issuance and trading of debt securities occurs has been fluctuating due to market uncertainty.'
In investing, 'liquidity' reflects how quickly securitiesproof of ownership or debt that has been assigned a value and may be sold can be bought or sold in the market without affecting their price. An investor might observe, 'Due to its high liquidity, the stock can be readily traded.'
In banking, 'liquidity' is key to ensuring the bank can meet its obligationsduties or promises. A bank manager might say, 'Our liquidity ratiosrelational figures showing the performance are robust, allowing us to meet customer's demands for withdrawals.'
In the world of corporate financefunds and financial framework of a corporation, 'liquidity' is the company's ability to pay off its short-term debts. The CFOchief financial officer might report, 'With our current liquidity, we can efficiently handle our debt obligations.'
Practice Professional Conversation
Listen to the given audio and respond using 'liquidity'.
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