Liquidity Refers to

question 109

Multiple Choice

Liquidity refers to

• A)the earnings on savings.
• B)the risk of an investment.
• C)the ease of converting a financial resource into cash.
• D)the amount of insurance coverage a person has.
• E)a person's inability to pay his or her debts.

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Definitions:

Annualized Rate of Return

The annualized rate of return is a way of calculating investment returns on an annual basis, taking into account the effect of compounding over the period.

Treasury Bill

Short-term government securities with maturity periods of one year or less, issued at a discount to their face value.

Exchange Rate

The value of one currency for the purpose of conversion to another, used in international trade and investment.

Natural Rate

Refers to the long-term unemployment rate or interest rate that is observed once the effect of short-term cyclical factors has been removed.