Liquidity: How Fast Can You Sell?
Liquidity is how quickly you can turn something into cash.
The idea
Liquidity means how fast you can turn something into cash without having to drop the price much. Cash itself is the most liquid thing there is, and shares of a big, popular company are close behind, because huge numbers of people are trading them all day. A rare comic book or a house is illiquid: you may wait weeks and still have to cut the price to find a buyer. Liquidity matters because it decides how easily you can change your mind. 💧
Words to know
- liquidity
- How easily something can be turned into cash.
- liquid
- Easy and quick to sell for about what it is worth.
- illiquid
- Slow and hard to sell without dropping the price.
- cash
- Money you can spend right away.
- discount
- Money taken off the price to help something sell faster.
Try it — no account needed
True or false about liquidity?
Cash is the most liquid thing you can hold.
In the full lesson
- 1True or false
- 2Work out the number
- 3Make the call
Vine has 107 lessons like this one, each written three ways so a 7-year-old and a 17-year-old both get a version that fits.
Practice with real prices
Real market data, pretend money. Learn how investing actually works without risking a cent.
Start free