In business, economics or investment, market liquidity is a markets ability to purchase or sell an asset without causing drastic change in the assets price. Equivalently, a market liquidity describes the assets ability to sell quickly without having to reduce its price to a significant degree. Liquidity is about how big the trade-off is between the speed of the sale and the price it can be sold for, in a liquid market, the trade-off is mild, selling quickly will not reduce the price much. In a relatively illiquid market, selling it quickly will require cutting its price by some amount, money, or cash, is the most liquid asset, because it can be sold for goods and services instantly with no loss of value. There is no wait for a buyer of the cash. There is no trade-off between speed and value and it can be used immediately to perform economic actions like buying, selling, or paying debt, meeting immediate wants and needs. If an asset is moderately liquid, it has moderate liquidity, in an alternative definition, liquidity can mean the amount of cash and cash equivalents. If a business has moderate liquidity, it has an amount of very liquid assets. If a business has sufficient liquidity, it has a sufficient amount of liquid assets. An act of exchanging a less liquid asset for a liquid asset is called liquidation. Often liquidation is trading the less liquid asset for cash, also known as selling it, for the same asset, its liquidity can change through time or between different markets, such as in different countries. The change in the liquidity is just based on the market liquidity for the asset at the particular time or in the particular country. The liquidity of a product can be measured as how often it is bought, Liquidity is defined formally in many accounting regimes and has in recent years been more strictly defined. For instance, the US Federal Reserve intends to apply quantitative liquidity requirements based on Basel III liquidity rules as of fiscal 2012, bank directors will also be required to know of, and approve, major liquidity risks personally. A liquid asset has some or all of the features, It can be sold rapidly, with minimal loss of value. The essential characteristic of a market is that there are always ready. A market may be considered both deep and liquid if there are ready and willing buyers and sellers in large quantities, an illiquid asset is an asset which is not readily salable due to uncertainty about its value or the lack of a market in which it is regularly traded. The mortgage-related assets which resulted in the mortgage crisis are examples of illiquid assets
Gold is a substance with high market liquidity, as it may be sold quickly without having to reduce the price.
This old church building for sale in Cheshire, England, has relatively low liquidity. It could be sold in a matter of days at a low price, but it could take several years to find a buyer who is willing to pay a reasonable price.