An individual's need for liquidity would increase if A) the average value of transactions carried out by the individual fell. B) the average value of transactions carried out by the individual rose. C) the individual got a raise. D) the individual received a new ATM card. E) the individual wanted to avoid risks.

Question

Social Studies

Seamus Ellis

20 August, 21:32

An individual's need for liquidity would increase if A) the average value of transactions carried out by the individual fell. B) the average value of transactions carried out by the individual rose. C) the individual got a raise. D) the individual received a new ATM card. E) the individual wanted to avoid risks.

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Answers (1)

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Robert Gibbs · Answer 1

An individual's need for liquidity would increase if B) the average value of transactions carried out by the individual rose.

Explanation:

Liquidity is the financial term used to explain the easiness in trading the asset or security in the market without compromising on its intrinsic value. Liquidity explains the quickness of conversion of asset into cash.

The need for liquidity of the person will increase if the average value of transactions performed by the person increases.

Sometimes liquidity risk exists in the market. The financial asset or security cannot be transacted quickly in the market without impacting the market price during liquidity risk.