Question

Of the items in the following lists, which go from most liquid to least liquid?
A) a six-month certificate of deposit, shares of stock, a new vehicle, a checking account
B) a new vehicle, a six-month certificate of deposit, shares of stock, a checking account
C) a checking account, a new vehicle, a six-month certificate of deposit, shares of stock
D) a checking account, a certificate of deposit, shares of stock, a new vehicle

Answer 1

Answer:

D) a checking account, a certificate of deposit, shares of stock, a new vehicle

Explanation:

Being liquid refers to the ability of an asset to convert to cash easily.  A liquid asset is one that can be converted to very quickly. The least liquid asset is one that takes a lot of time and effort to convert to cash. Cash is the most liquid asset, as it does not require any conversion.

Cash in the bank is treated as cash. It is highly liquid because conversion is not needed. From the list provided, the motor vehicle will be the least liquid. It is a tangible asset that requires an unspecified amount of time to dispose of. At times buyers can be identified after a lengthy period.  A certificate of deposit is fairly liquid as its maturity period is anywhere between days and nine months.