Cash is the most liquid asset as it is already converted into cash which can be used to pay liabilities immediately.
What is the most liquid category of assets?
Cash on hand is considered the most liquid type of liquid asset since it is cash itself. Cash is legal tender that an individual or company can use to make payments on liability obligations.
Which is the most liquid asset quizlet?
Cash is the most liquid of all assets.
Which one of the following is the most liquid?
Notes: Liquidity order is M1>M2>M3> M4 i.e. M1 is most liquid and M4 is least liquid.
Is cash the most liquid asset?
Liquidity describes your ability to exchange an asset for cash. The easier it is to convert an asset into cash, the more liquid it is. And cash is generally considered the most liquid asset .
What asset is least liquid?
Land, real estate, or buildings are considered the least liquid assets because it could take weeks or months to sell them. Before investing in any asset, it’s important to keep in mind the asset’s liquidity levels since it could be difficult or take time to convert back into cash.
Is gold a liquid asset?
Gold is a highly liquid yet scarce asset , and it is no one’s liability. It is bought as a luxury good as much as an investment.
Is deposit an asset or liability?
The deposit itself is a liability owed by the bank to the depositor. Bank deposits refer to this liability rather than to the actual funds that have been deposited. When someone opens a bank account and makes a cash deposit, he surrenders the legal title to the cash, and it becomes an asset of the bank.
What is the opportunity cost of an investment quizlet?
For a safe capital investment, the opportunity cost is the interest rate on safe debt securities , such as high-grade corporate bonds. For riskier capital investments, the opportunity cost is the expected rate of return on risky securities—investments in the stock market, for example.
Which of the following is the most liquid asset multiple choice question?
Cash is a highly liquid asset followed by the banking accounts, checkable account, short-term promissory notes, treasury bills and other government bonds.
What is ideal current ratio?
In general, a good current ratio is anything over 1, with 1.5 to 2 being the ideal. If this is the case, the company has more than enough cash to meet its liabilities while using its capital effectively. ... It might be very common in certain industries to have current ratios lower than 1.
Which one out of the following is the most liquid among the measures of money supply?
M1 is most liquid and easiest for transactions whereas M4 is least liquid of all. M3 is the most commonly used measure of money supply. It is also known as aggregate monetary resources.
Which of the following is one of the three functions of money?
To summarize, money has taken many forms through the ages, but money consistently has three functions: store of value, unit of account, and medium of exchange .
Is a vehicle a liquid asset?
A liquid asset is either available cash or an instrument that has the capacity to be easily converted to cash. ... Liquid assets differ from non-liquid assets, such as property, vehicles or jewelry, which can take longer to sell and therefore convert to cash, and may lose value in the sale.
Is Fd a liquid asset?
FDs are invested into until a specific maturity period. Liquid funds , however, invest in money market instruments having lower maturity period and thus they ensure liquidity. “The primary areas of difference between bank FDs and liquid funds are returns, safety, taxation, and liquidity.
Why cash is the most liquid asset?
Cash is considered to be highly liquid because it’s already in its most liquid form and doesn’t need to be converted , while money you have in stocks is slightly less liquid because there are more steps involved in converting it to cash.
