In trading, what does liquidity mean and how does it work
In: Economics
Cash is a liquid asset: everybody takes it, its constantly changing hands, and therefore there’s an agreed upon value because everybody can ask for pretty much the same things for it.
A house is *not* a liquid asset: If you want to sell a house you have to go through a lot of effort, pay a bunch of fees, and wait a long time for somebody to come along who wants to pay as much as you’d like. If you wanted to sell your house quickly because you desperately needed the money, you’d have to price it really cheap to attract a buyer quickly, but you’d lose a lot of the potential value.
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