What is Liquidity?
The ease with which a security or asset can be sold or brought in market, without causing any effect on its price. Assets or stock which can be easily traded are considered as highly liquid assets. Though, there is no specific formula to calculate liquidity, it can be calculated with the help of liquidity ratios.
Why You Care
For investors, it is always safe to invest in stocks or assets which have got high liquidity. This is because it helps them to easily turn investments into cash and they don’t have to wait to find buyers or sellers. Money market securities and stocks of blue chip companies are few examples of liquid assets.
ETN (Exchange Traded Notes),
ETF (Exchange Traded Fund),
Stock Index Futures Options (aka Equity Index Futures Options),
Stock Index Futures (aka Equity Index Futures),
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