Question

What does it mean that stocks and bonds are relatively liquid? a. They are easier to buy and sell than other forms of investment. b. They tend to go up and down in value. c. The amount of income they can bring changes frequently. d. There are more of them to choose from than other forms of investment.

Answer 1

Answer:

The answer is A.

Explanation:

They are easier to buy and sell than other forms of investment. When they say an asset is liquid, it means it can easily be turned or converted to cash. Liquid stocks and bonds are easier to sell and buy because they will be see a buyer and seller to pay in exchange for cash.

Illiquid means they are difficult to sell and buy or they are difficult to be converted to cash

Answer 2

Answer:

The correct answer is letter "A": They are easier to buy and sell than other forms of investment.

Explanation:

The liquidity of an asset reflects the ease at which it can be transformed into cash from an investment. Liquid assets are easily convertible to cash and see little or no difference in the value of the assets after converted. Illiquid assets are more difficult to convert, which can result in a substantial decrease in their value after converted.

When it comes to securities like stocks or bonds, liquidity refers to the ability the asset has to be bought and sold quickly. It implies the securities have enough buyers and sellers to enter and exit a position.