Question

How do liquid assets differ from illiquid assets? Discuss with examples

Answer 1

Liquid assets- Liquid assets are those assets that can be easily exchanged for money with in a short span of time. Generally liquid assets have high amount of demand and supply. Generally liquid assets have a readily available market

For example - Cash, Marketable securities, short term assets , Units of mutual funds etc

illiquid assets- These are a contra for liquid assets. These cannot be converted into cash with in a short span of time. there wont be a readily available market for these. Generally to encash illiquid assets we have to search for a potential buyer and it takes time

For example- Unlisted shares, Land & buildings etc