Liquidity is
A) The ability of an asset to be converted to cash.
B) Directly affected by the coupon rate.
C) Not important for bondholders.
D) The opportunity cost of purchasing a bond.

Question

Quizplus · Accepted Answer

Liquidity refers to the ability of an asset to be converted to cash, making option A the correct choice. The coupon rate is not directly related to liquidity, so option B is incorrect. Liquidity is important for all investors, including bondholders, making option C incorrect. Liquidity is not the opportunity cost of purchasing a bond, so option D is also incorrect.

Liquidity Is