Liquidity in Finance – Ability to Convert Asset into Cash (MCQ)

1 FINANCE MCQS

Which term refers to the ability of an asset to be quickly converted into cash?

Variable securities
Convertible securities
Liquidity
Constant securities

Correct Answer: C. Liquidity

Detailed Explanation

Liquidity means how easily and quickly an asset can be converted into cash without affecting its price. Assets like cash and bank deposits have high liquidity, while real estate and long-term investments have low liquidity. In finance, liquidity is an important measure of financial flexibility and stability.

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Which term refers to the ability of an asset to be quickly converted into cash?

Which term refers to the ability of an asset to be quickly converted into cash?

Detailed Explanation

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In cash flow analysis, two projects are compared using a common life approach, which is classified as…

In capital budgeting, the Internal Rate of Return (IRR) of a project is classified as its ____________?…

In evaluating independent projects, the results of Internal Rate of Return (IRR) and Net Present Value…