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2 January, 10:08

Consider the relative liquidity of the following assets: Assets 1. A share in a publicly traded company 2. The funds in a savings account 3. A $10 bill 4. Your car 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

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  1. 2 January, 11:05
    0
    The answer is:

    1. The $10 bill

    2. funds in a savings account

    3. Shares in a publicly traded company

    4. Car

    Explanation:

    Liquidity is a function of how fast or how quickly one can turn an instrument or assets into cash.

    The most liquid asset is the $10 bill because it is a cash already

    The Second-Most Liquid is the funds in a savings account. This can be turn into cash when one walks into the bank for withdrawal

    The Third-Most Liquid is the share in a publicly traded company

    And the Least Liquid is the car because looking for a buyer to buy car in exchange for cash might take a while
  2. 2 January, 11:53
    0
    Assets in order of liquidity, from most liquid to least liquid are:

    1. A $10 bill

    2. The funds in a savings account

    3. A share in a publicly traded company

    4. Your car

    Explanation:

    The $10 bill is the most liquid, representing cash in hand. It is followed by funds in a savings account, which can be withdrawn at short notice.

    The share in a publicly traded company can also easily be turned into cash when the certificate is sold to another investor. It will take less time to do than turning a car into cash.

    The car is therefore the least liquid because you will need to find a willing buyer who will likely inspect and test-drive the car. The buyer will also get it assessed by a technician.

    Liquidity of an asset is based on the time it will take for an asset to be turned into cash. Surely, the car will take a longer time than any other stated asset above.
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