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QUESTION:

2. Liquidity

Consider the relative liquidity of the following assets:
Assets
1.A $1 bill
2.The funds in a savings account
3.Your condo
4.A bond issued by a publicly traded company
Select the assets in order of their liquidity, from most liquid to least liquid.
Asset
Most Liquid    
Second-Most Liquid    
Third-Most Liquid    
Least Liquid    

ANSWER:

Select the assets in order of their liquidity, from most liquid to least liquid.
Asset
Most Liquid$1.00 bill  Correct 
Second-Most LiquidFunds held in a savings account  Correct 
Third-Most LiquidBond  Correct 
Least LiquidCondo  Correct 
Points:
1 / 1
Close Explanation
Explanation:
Liquidity refers to how quickly an asset can be converted into a medium of exchange.
Cash or currency can be used immediately as a medium of exchange, so a $1.00 bill is the most liquid asset listed here.
The funds in a savings account must be withdrawn before they can be used to purchase goods and services, but this transaction usually can be done within a day or two, assuming the account is with a local bank.
A broker can sell a bond issued by a publicly traded company within a short period of time, and then it may take a few days for the accounts to settle and for you to receive your cash.
Your condo is the least liquid of the assets because it may take weeks or even months to find a buyer and get your cash.

Posted by Cleveland on September 9, 2024
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