Question

An asset's ______ is the ease with which it can be converted quickly into the most widely accepted and easily spent form of money, cash, with little or no loss of purchasing power.

Answer 1

The answer is liquidity of the asset.

When an asset is purchased or sold, its liquidity relates to how readily it may be changed to cash. Cash is the most liquid asset since it can be traded fast and readily without affecting its market value.

Liquidity is defined as having enough cash on hand to satisfy financial obligations. Cash or the property that can be easily converted to cash without suffering a significant loss in value are examples of liquid assets. Higher the liquidity better it is .

Therefore, the answer is asset's liquidity.

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Answer 2

An asset's liquidity is the ease with which it can be converted quickly into the most widely accepted and easily spent form of money, cash, with little or no loss of purchasing power.

What is Asset Liquidity?

• When a financial asset is bought or sold, its liquidity relates to how quickly it may be transformed into cash. The ability to move cash quickly and readily without affecting its market value makes it the asset with the highest liquidity.
• An asset is considered to be liquid if it can quickly and easily be turned into cash. Cash, instruments from the money market, and marketable securities are examples of liquid assets.
• Keeping track of the liquid assets that make up a component of one's net worth can be a worry for both individuals and organizations.
• A company's liquid assets are recorded as current assets on its balance sheet for financial accounting reasons.

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