Liquidity Management (Eloctronics in India)

A substantial amount of confusion and imprecision exists concerning liquidity. Identifying and distinguishing the several meanings of liquidity is an essential step towards clarifying the subject. In business economics or investment market liquidity is a market’s ability to facilitate an asset being sold quickly without having to reduce its price very much (or even at all). Equivalently an asset’s market liquidity (or simply “an asset's liquidity”) is the asset's ability to sell quickly without having to reduce its price very much. 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.