Liquidity of an asset increases when
A)It is easier to convert the asset into cash
B)The asset's value is below its original price
C)The asset is purchased
D)The asset depreciates
E)The asset is put on the market

Question

Quizplus · Accepted Answer

Liquidity refers to the ease with which an asset can be converted into cash without affecting its market value. When it is easier to convert an asset into cash, its liquidity increases. Hence option A is the correct choice. The remaining options do not necessarily increase liquidity.

Liquidity of an Asset Increases When