Question

Many people like to hold some of their assets as it is the most liquid of all assets, and there is no risk of capital loss.quzilet

Answer 1

Many people like to hold some of their cash on hand is the most liquid asset of all assets and there is no risk of capital loss.

What is a liquid asset?

Refers to assets that can be exchanged for cash, simply and quickly, such as stocks and bonds. Cash on hand is considered the most liquid of all assets because it is accessible more quickly than other assets, through a withdrawal, for example. So, cash on hand has:

• Market liquidity
• Accounting liquidity

The liquidity of an asset, then, is determined by the speed and high availability with which the asset can be converted into cash, without losing market value due to any oscillation or inherent risks in the financial market.

Therefore, cash on hand is the most liquid asset of all assets and is not subject to market fluctuations, being one of the most used asset options by people, due to the security and high availability with which it can be obtained.

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