Liquid asset - Financial definition
Concise definition of the term liquid asset
A liquid asset is an asset that can be quickly and easily converted into cash without significantly affecting its value.
Comprehensive definition of the term liquid asset
In finance and economics, liquid assets are essential for managing short-term financial obligations and ensuring operational flexibility. These assets include cash, bank deposits, marketable securities like stocks and bonds, and other near-cash items such as Treasury bills.
Businesses and individuals hold liquid assets to maintain liquidity, meet unexpected expenses, and take advantage of investment opportunities. Market practices emphasize the importance of maintaining a balance between liquid and illiquid assets to optimize both security and potential returns.