How would you describe Liquidity?

Question

BlackTom AI · Accepted Answer

First, let's parse the question: it asks how you would describe Liquidity. The options present different forms or concepts of asset convertibility.
Option a: 'Short-Term Cash' — This is the classic description of liquidity in financial terms: cash or assets that can be quickly converted to cash with little or no loss of value. It aligns with the standard definition of liquidity as the ease of converting assets to cash.
Option b: 'Fast-Flowing Inventory' — Inventory can be converted to cash, but it is not as liquid as cash itself. Depending on turnover rates and market demand, some inventory may be harder to sell quickly without discounts, so labeling it as highly liquid is misleading.
Option c: 'Gold Bullion' — While gold is relatively liquid in many markets, it is not as universally and instantaneously liquid as cash, especially in everyday accounting contexts. It involves selling and pricing, which implies more friction than cash.
Option d: 'Long-Term Cash' — Cash is by nature short-term in the sense of liquidity; describing cash as long-term is contradictory. Liquidity emphasizes immediate or near-immediate convertibility, not long-horizon holdings.
Taken together, the best match to the standard description of liquidity is Short-Term Cash, which directly reflects the ability to meet short-term obligations with readily available funds.
In contrast, the other options mischaracterize liquidity by either overburdening non-cash assets with 'liquidity' properties or by suggesting contradictory notions (long-term cash) or less-than-ideal immediacy (inventory as highly liquid in all cases, or gold bullion depending on market conditions).
Therefore, option a is the most accurate description of liquidity in typical financial contexts.

How would you describe Liquidity?

查看解析

登录即可查看完整答案

类似问题

Question18 Which of the following is considered the ultimate liquid asset? Select one alternative: a. Cash b. T-bills c. T-notes d. T-bonds e. Wholesale CDs ResetMaximum marks: 2 Flag question undefined

In Finance, what is the term for how much cash or easily accessible money is available at a given time?

How would you describe Liquidity?

How would you describe Liquidity?

The ability of a business to meet its debts as they fall due is known as

The ability of a business to manage its assets and liabilities is known as

The ability of a business to meet its debts as they fall due is known as

The ability of a business to manage its assets and liabilities is known as

更多留学生实用工具

考试浏览器助手

风格化写作助手

论文查重助手

文献引用助手

课堂转译助手

课堂笔记助手

Quiz搜索助手

学校历年真题

智能刷题助手

智能匹配练习

希望你的学习变得更简单