What Is Liquidity?

Patrick Curtis

Reviewed by

Patrick Curtis WSO Editorial Board

Expertise: Investment Banking | Private Equity

Liquidity is a term which refers the ease and speed with which an asset can be converted into cash. A liquid asset will be exchangeable for cash very quickly with no loss in value, whilst an illiquid asset will usually take time and may even lose value as a result.

Some examples of liquid assets are:

  • Savings Accounts
  • Stock
  • Options

Some examples of illiquid assets are:

  • Property
  • Money in investment funds
  • An asset for which there is no market (i.e. CDOs in 2008)

Related Terms

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Patrick Curtis

Patrick Curtis is a member of WSO Editorial Board which helps ensure the accuracy of content across top articles on Wall Street Oasis. He has experience in investment banking at Rothschild and private equity at Tailwind Capital along with an MBA from the Wharton School of Business. He is also the founder and current CEO of Wall Street Oasis. This content was originally created by member WallStreetOasis.com and has evolved with the help of our mentors.