Question

Which of the following would be considered to be the most liquid? small time deposits savings deposits checkable deposits money market mutual funds

Answer 1

Answer:

Checking Accounts

Explanation:

Now lets break this down so you can understand more clearly.

Liquidity simply means the ability to convert any asset in to cash easily.

1. Small Time Deposits: in USA, small deposits are deposits under $100,000 and "small time" means they are generally deposited for a limited time. like a year or for a quarter. They are liquid, but not as much as Checking accounts.
2. Checking Accounts: The are designed to support in carrying out daily transactions and are almost equal to "money (cash in hand)". No interest is paid on the balance of these accounts. Moreover, you can use Cheques to do transactions as well.
3. Money Market Mutual Funds: Mutual funds that invest in low risk debt securities such as Treasury Bills and Commercial Papers.
4. Savings Accounts: These are deposits made in the intention of saving and bears a descent interest rate too. They are highly liquid too, as you can withdraw cash anytime you want. Yet compared with the Checking Accounts, not so much.

But remember, all the things you've mentioned here has a good liquidity. Checking Account is just "Super" liquid.