Liquidity
- What is liquidity
- What does liquidity mean in terms of economy and market?
Liquidity information in the market. Which assets have high liquidity and less in which?
At the same time, you will understand how the stock market provides liquidity for shares and other securities.
At the same time, you will understand the impact of liquidity on the market prices of that asset.
How different liquidity levels differ in different assets and how it can affect someone's decision to invest. How RBI controls Liquidity. The stock market is important for providing liquidity in shares.
Liquidity Meaning
This is called a simple of liquidity, but we will use the word liquidity for convenience here. Liquidity literally means liquidity. So, to understand easily, we can say that if we go to the market to buy something and its availability is constant, we can assume that there is enough liquidity in that commodity.
Liquidity Meaning
Liquidity describes the level at which property or stock in the market can be bought or sold immediately without affecting the asset price.
The market Liquidity indicates the level at which properties in the market such as the stock market or the property market in the city can be bought or sold at stable prices. Cash is considered to be the most liquid while property, fine art and all other collectibles are relatively low liquid.
standards of Liquidity
Cash is considered standard for liquidity as it can be converted fastest and easily in other properties. If a person wants to buy a TV of 25000, cash is the property in return for which it can be easily purchased. Now, if he has 25,000 ornaments, he may have some difficulty in buying a TV by giving them these ornaments. He will first have to raise cash by selling jewellery which may take some time.
Then he can buy a TV with that cash. So, we can say that liquidity of cash is more than jewellery.
Liquidity in the market
In the example above, you saw that it is almost impossible to buy a TV instead of jewellery because there is no market where jewellery and TV are exchanged.
There is so much liquidity of shares available in the stock market that buyers and sellers are available for any stock almost immediately and the deals are settled at a faster pace. The real estate market has much lower liquidity than the stock market.
Factors in Investment
There are times when property may have to be sold at prices lower than its market prices due to non-availability of buyers in the market. Whenever you invest in a asset, always keep in mind how much liquidity there is in that asset and there will be no difficulty in selling it.
How RBI controls Liquidity
RBI controls the Liquidity of funds in banks. Liquidity here means flow of funds i.e. availability of money. Banks and financial institutions provide funds to the general public through business loans and consumer loans.
These loans are usually going to increase the demand for goods. This increased demand causes inflation to rise. That is why RBI controls this liquidity by changing interest rates and CRR from time to time.
Hi , This is Pramod Choudhary from Nagaur Rajasthan India. I an student and I would like to share my positive thinking with everyone that's my passion . Thank you
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