Which of the following assets will increase your liquidity?
A)A higher balance in your chequing account
B)Growth in the value of your home
C)Cash in your RRSP
D)A defined-contribution pension plan

Question

Quizplus · Accepted Answer

Assets that can easily be converted to cash without sacrificing their value are considered liquid. A higher balance in your chequing account is one such asset and will increase your liquidity. Growth in the value of your home (option B) is an example of an illiquid asset, as it cannot be converted to cash quickly without losing value. Cash in your RRSP (option C) cannot be accessed without incurring significant taxes and penalties unless you meet certain criteria. Similarly, a defined-contribution pension plan (option D) may have restrictions on early withdrawals and may not be accessible until retirement.

Which of the Following Assets Will Increase Your Liquidity