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Which among the following is considered to be the most liquid asset?
  • a)
    Gold
  • b)
    Money
  • c)
    Land
  • d)
    Treasury bonds 
Correct answer is option 'B'. Can you explain this answer?
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Most Upvoted Answer
Which among the following is considered to be the most liquid asset?a)...
The most liquid asset among the given options is Money.

Explanation:


  • Liquidity: It refers to the ease with which an asset can be converted into cash without any significant loss in value.

  • Money: Money is considered the most liquid asset because it is widely accepted as a medium of exchange and can be easily used to purchase goods and services.

  • Gold: Although gold is valuable and widely traded, it is not as liquid as money. Selling gold may involve finding a buyer and going through a process, which may take time and may not guarantee the full value of the asset.

  • Land: Land is a relatively illiquid asset as it may take time to find a buyer and complete the legal process of transferring ownership.

  • Treasury bonds: Treasury bonds are considered relatively liquid as they can be bought and sold in the financial markets. However, they may not be as liquid as money, as selling bonds may involve finding a buyer and going through the process of selling securities.


Therefore, money is the most liquid asset among the given options as it can be easily converted into cash and used for immediate transactions.
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Direction: Read the following text and answer the questions given below:“Usually, money market funds are recommended to investors with an investment horizon of 90- 365 days. These schemes can help you diversify your portfolio and help invest surplus cash while maintaining liquidity. It is a good option for retail investors with smaller investment amounts. Ensure that you invest according to your investment plan.”After reading this article in a magazine, Ramesh who needs funds for his venture decided to buy a financial asset from the RBI. This financial asset is an instrument of short-term borrowing. He decided to buy it because he doesn’t want to take risk and wants an assured return. This instrument is a promissory note. It is highly liquid. This instrument is also known as Zero Coupon Bond. On this instrument is written T-91. Investment in this instrument started with just ₹ 25,000. For a higher value it is given in the multiples of ₹ 25,000.Q. Which financial asset is indicated in the above case?

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Which among the following is considered to be the most liquid asset?a)Goldb)Moneyc)Landd)Treasury bondsCorrect answer is option 'B'. Can you explain this answer?
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