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liquidity

definitions

  1. The ease at which an asset can be converted to cash. For investments, this refers to the degree to which supply equals demand. A shortage of either buyers or sellers in any market can result in substantial price swings resulting in an unfavorable fill for a market order or the inability to obtain a fill on a limit order. Conversely, high volume typically ensures an abundance of both buyers and sellers and greater liquidity.

  2. The ease at which an asset can be converted to cash. See Liquid Assets; Quick Ratio.