Which financial instrument is the most liquid? (2024)

Which financial instrument is the most liquid?

Cash is the most liquid asset

, followed by cash equivalents, which are things like money market accounts, certificates of deposit (CDs), or time deposits. Marketable securities, such as stocks and bonds listed on exchanges, are often very liquid and can be sold quickly via a broker.

What is the most liquid in a financial statement?

Cash on hand is the most liquid type of asset, followed by funds you can withdraw from your bank accounts. No conversion is necessary — if your business needs a cash infusion, you can access your funds right away.

Which investment tool is the most liquid?

In order of liquidity, the most liquid investments include: Money – actual cash currencies. Money market assets – short-term debt securities such as CDs or T-bills. Marketable securities – stocks or bonds.

Which of the following is the most liquid accounting?

Cash in hand is considered the most liquid asset in accounting.

What is a liquid financial instrument?

Liquid assets refer to cash on hand, cash on bank deposit, and assets that can be quickly and easily converted to cash. The common liquid assets are stock, bonds, certificates of deposit, or shares.

Which financial instrument is the most liquid quizlet?

Savings or checking account funds are considered one of the most liquid investments because the money can be removed at short notice and low cost.

Which of the following assets is the most liquid Quizlet?

Among the choices, the one that should be considered as the most liquid asset is cash itself.

Which asset is the least liquid?

Is inventory more liquid than accounts receivable?

Both account receivables and inventory are current assets. However, account receivables is considered to be more liquid compared to inventory.

Which investments are the most liquid which are the least liquid?

Asset Characteristics

Different asset classes inherently carry varying degrees of liquidity based on their unique characteristics. For instance, cash is the most liquid of assets, while tangible items like real estate are considered to be among the least liquid.

What is the most and least liquid investment?

The most liquid assets are those that are the quickest to convert to cash. Currency is very liquid since it is already cash. Savings bonds are also highly liquid because they can be redeemed at the bank. The least liquid of the three assets would be a house.

What is the most liquid cash asset?

The easier it is to convert an asset into cash, the more liquid it is. And cash is generally considered the most liquid asset. Cash in a bank account or credit union account can be accessed quickly and easily, via a bank transfer or an ATM withdrawal.

Which is the most liquid form of money quizlet?

M1 is the most liquid measure of the money supply. It consists of checking deposits, travelers checks, and currency in circulation.

Which are the most liquid assets and liabilities on a balance sheet?

Cash and cash equivalents are the most liquid assets and can include Treasury bills and short-term certificates of deposit, as well as hard currency. Marketable securities are equity and debt securities for which there is a liquid market. Accounts receivable (AR) refer to money that customers owe the company.

Which are the liquid funds?

Liquid funds are debt funds that invest in short‐term assets such as treasury bills, government securities, repos, certificates of deposit, or commercial paper.

Which savings vehicle is most liquid?

Money market accounts are considered a liquid way to save money, meaning you can quickly access your funds to use for other purposes. Aside from a checking account, money market accounts may be the most liquid savings vehicle.

What is the financial instrument liquidity risk?

Financial risk includes: credit risk, the risk to the value of the account portfolio arising from failure to meet the terms of any contract; price risk, the risk to the value of the account portfolio arising from changes in the value of the underlying financial instrument; liquidity risk, the risk to the value of the ...

What is the largest and most liquid financial market?

The forex market is a market for currencies. It is the largest, most liquid market in the world in terms of the total cash value traded, and any entity or country may participate in this market.

What is the largest and most liquid of any financial markets?

This means that the buyer of a currency in the spot market will receive the currency immediately, and the seller of a currency in the spot market will deliver the currency immediately. The spot market is the most liquid forex market, and it is the most commonly used market for trading currencies.

What is the most liquid asset and why?

And cash is generally considered the most liquid asset. Cash in a bank account or credit union account can be accessed quickly and easily, via a bank transfer or an ATM withdrawal. Liquidity is important because owning liquid assets allows you to pay for basic living expenses and handle emergencies when they arise.

What is the least liquid account?

Certificate of deposit is the least liquid type of account (CD). In a certificate of deposit, a bank customer deposits a lump-sum payment in the account, which can then be withdrawn after a set period of time. The interest rate on a CD is higher than on a regular savings account.

Which asset is the most liquid apex?

Cash such as USD, is considered to be the most liquid asset as it provides a widely accepted medium of exchange which can easily be converted into other assets. Real estate and art are asset classes considered to be relatively illiquid.

What assets are most and least liquid?

Which among the following is the most liquid asset of a company?

Answer and Explanation:

Cash is the most liquid asset as it can be used to pay liabilities immediately.

Why is inventory least liquid?

Compared to the other current assets, inventory is known to be the least liquid. This is because unlike accounts Receivable, where a customer must pay, or short-term securities, which will mature within the year, inventory must be manufactured and sold to be considered a current asset.