If a Financial Asset Is Liquid, It Is

question 32

Multiple Choice

If a financial asset is liquid, it is:

• A)considered to be a safe asset with no chance of being deleveraged.
• B)an online asset and has no physical piece of paper associated with it.
• C)a highly desirable asset.
• D)an asset that can easily be converted into cash.

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Definitions:

Interest Payment

The payment made by a borrower to a lender for the privilege of borrowing money, usually expressed as a percentage of the principal amount.

Present Value

The current estimated value of future money amounts or cash flow sequences, based on a specified return rate.

Annual Interest Rate

The percentage of the principal that a borrower must pay as interest over the course of one year, affecting the total cost of loans or the yield from investments.

Annuity

A monetary instrument offering regular, fixed payments to someone, commonly employed to generate a revenue flow for retired individuals.