-Liquidity Is the

question 503

Multiple Choice

-Liquidity is the

• A) degree to which an asset acts as money without a loss of value.
• B) ease with which an asset can be converted into a means of payment with little or no loss of value.
• C) degree to which money can be converted into an asset with little or no loss of value.
• D) ease with which credit cards are accepted as a means of payment.

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Definitions:

Face Value

The nominal value printed on a financial instrument like a bond or a stock certificate, representing its legal value.

Present Value

The current worth of a future sum of money or stream of cash flows given a specified rate of return, used in discounting and investment appraisal.

Fair Value

Fair value refers to the estimated market value of an asset or liability, based on current market conditions and comparable transactions, used in financial reporting.

Capital Lease

A lease considered to have the economic characteristics of asset ownership for accounting purposes.