When used in the context of investment decision making, the term liquidity refers to "the simplicity and quickness of selling an asset without taking a loss."
In a secondary market, liquidity generally is the speed with which or easily security could be acquired or sold. When cash is needed, liquid investments could be easily sold without incurring a large cost.
The degree to which an item could be swiftly purchased or sold on the market at a price that reflects its intrinsic value is referred to as liquidity. Due to its ease and speed of conversion into other assets, cash is regarded as the most liquid asset.
Therefore, when used in the context of investment decision making, the term liquidity refers to "the simplicity and quickness of selling an asset without taking a loss."
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