Glossary

Liquidity

This refers to the ease with which an asset can be converted into cash. For instance, the liquidity of a certain company’s stock refers to the ability of the market to absorb buying and selling of this stock without serious effect on the stock price. Tends to refer to large, high quality companies with lots of share activity taking place and a big market for it to trade. Illiquid stock is that which has low volume, where even a small number of trades can affect its price, such a property.