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GLOSSARY: Enter search term:
Browse dictionary by letter: A B C D E F G H I J K L M N O P Q R S T U V W X Y Z

Glossary Term: LIQUIDITY

Definition(s) for LIQUIDITY:


1. ) Depth of market to absorb buy and sell interest of even large orders at prices appropriate to supply and demand.  The market must also adapt quickly to new information and incorporate that information into the stock's price.  Liquidity is one of the most important characteristics of a good market. 

2. ) The degree to which assets of a company or an investment can easily be sold or converted into cash.

3. ) Quality that makes an asset easily convertible into cash with relatively little loss of value in the conversion process. Sometimes used more broadly to encompass credit in hand and promises of credit to meet needs for cash.

4. ) The ease with which a security can be traded on the market, usually defined by turnover.

5. ) The ability to easily trade shares, even in large parcels, with prices not pushed up or down by individual trades. In a liquid market there are many buyers and sellers willing to trade large volumes at small price differences.

6. ) The ability to make payments as they become due in readily available funds.

7. ) The ability to convert assets to cash readily.


See Also:
COMMERCIAL LOAN THEORY OF LIQUIDITY, CYCLICAL LIQUIDITY RISK, EXTERNAL LIQUIDITY RISK, GEOGRAPHIC LIQUIDITY RISK, INTERNAL LIQUIDITY RISK, LIQUIDITY CONTINGENCY RISK, LIQUIDITY GAP OR LIQUIDITY GAP RISK, LIQUIDITY OPTION RISK, LIQUIDITY PREFERENCE, LIQUIDITY PREMIUM, LIQUIDITY RESERVES, LIQUIDITY STOCK, MARKET LIQUIDITY RISK, PRUDENTIAL LIQUIDITY, SHIFTABILITY THEORY OF LIQUIDITY, STANDBY LIQUIDITY, STRUCTURAL LIQUIDITY, SYSTEMIC LIQUIDITY RISK, LIQUIDITY DISCOUNT


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