Liquidity

Liquidity refers to how easily and quickly an asset can be sold for cash without the seller having to accept a discount on account of the speed of the transaction. Liquidity depends on a number of factors, one of the most important being the type of asset at issue. Cash in an FDIC-insured bank is about as liquid as an asset there is. An acre of farmland in the Midwest that is completely surrounded by thousands of other acres of farmland is an example of an asset that would be at the other end of the liquidity spectrum.