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Relative liquidity refers to the ease with which an asset can be converted into cash without significantly affecting its price. It compares the liquidity of different assets or markets, highlighting how some may be more readily tradable than others. For example, stocks of large companies typically have higher relative liquidity compared to those of smaller firms or less popular investments. Understanding relative liquidity is crucial for investors when making decisions about asset allocation and risk management.

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1mo ago

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Related Questions

What term refers to the relative ease of converting assets into cash?

liquidity


What is meant by international liquidity?

It used to be that the term international liquidity meant the relative amount of resources available to a nations monetary authorities that could be used to settle a balance of payments deficit. In the days of the gold standard, this would mean access to gold that could be used to redeem a nation's currency held by foreigners.


Why might a profitable business face liquidity problems?

No liquidity


What is liquidity in financial system?

Liquidity is basically how much cash is available.


How can a company improve its liquidity position?

How can the liquidity position of a company be improved


Liquidity and yield analysis?

what is the comparison between liquidity & yield analysis ??????


What is the ability to be used as or directly converted to cash called?

Liquidity


Why is liquidity?

In business terms, liquidity is very important as it can help an establishment to quickly come out of debt. Liquidity is the measure of how sellable an investment or asset is.


What is a liquidity order?

ORDER OF LIQUIDITY is when items on a balance sheet are listed in order of liquidity. After cash, the other current assets are listed in order of liquidity or nearness to cash (i.e. Accounts Receivable first, then Inventory).


Shortage of liquidity in money market?

is the drain of excess liquidity from the money market


Why is liquidity important?

In business terms, liquidity is very important as it can help an establishment to quickly come out of debt. Liquidity is the measure of how sellable an investment or asset is.


What is liquidity decision?

The decision made for the management of current asset that affects a firm's liquidity.