[Solved] Which of the following currency is the least liquid? (2024)

FAQs

Which money is least liquid? ›

M4is the least liquid and M1 is the most liquid measure of money.

M1 is most liquid and easiest for transactions whereas M4 is least liquid of all. M3 is the most commonly used measure of money supply. It is also known as aggregate monetary resources.

M1 includes the most liquid portions of the money supply because it contains currency and assets that either are or can be quickly converted to cash.

Time Deposits: Time deposits, such as certificates of deposit, are also included in M4. These deposits are not as liquid as other forms of money because they have a fixed term and cannot be withdrawn before maturity without penalty.

A handful of examples of non-liquid assets are: Investment real estate (Real estate may take time to sell and requires significant effort to convert into cash.) Business interests (These may require finding a buyer with the skill, experience and capital needed to keep the business running.)

Cash is the most liquid asset, followed by cash equivalents, which are things like money market accounts, certificates of deposit (CDs), or time deposits. Marketable securities, such as stocks and bonds listed on exchanges, are often very liquid and can be sold quickly via a broker.

The most common examples of non-liquid assets are equipment, real estate, vehicles, art, and collectibles. Ownership in non-publicly traded businesses could also be considered non-liquid. With these kinds of assets, the time to cash conversion is difficult to predict.

Certificate of deposit is the least liquid type of account (CD). In a certificate of deposit, a bank customer deposits a lump-sum payment in the account, which can then be withdrawn after a set period of time. The interest rate on a CD is higher than on a regular savings account.

Cash is the most liquid asset possible as it is already in the form of money. This includes physical cash, savings account balances, and checking account balances. It also includes cash from foreign countries, though some foreign currency may be difficult to convert to a more local currency.

What are the assets from most liquid to least liquid? ›

The least liquid current asset is inventory. This is because sales of finished goods depend highly on customer demands. If the need for the good is low, then the inventory stock will increase and not be quickly converted into cash.

M1 money supply includes those monies that are very liquid such as cash, checkable (demand) deposits, and traveler's checks. M2 money supply is less liquid in nature and includes M1 plus savings and time deposits, certificates of deposits, and money market funds.

Historically, M1 money supply included those monies that are very liquid such as cash, checkable (demand) deposits, and traveler's checks, while M2 money supply included those monies that are less liquid in nature; M2 included M1 plus savings and time deposits, certificates of deposits, and money market funds.

M1 consists of the most highly liquid assets. That is, M1 includes all forms of assets that are easily exchangeable as payment for goods and services. It consists of coin and currency in circulation, traveler's checks, demand deposits, and other checkable deposits.

Cash is the most liquid asset, followed by cash equivalents, which are things like money market accounts, certificates of deposit (CDs), or time deposits. Marketable securities, such as stocks and bonds listed on exchanges, are often very liquid and can be sold quickly via a broker.

The most common examples of non-liquid assets are equipment, real estate, vehicles, art, and collectibles. Ownership in non-publicly traded businesses could also be considered non-liquid. With these kinds of assets, the time to cash conversion is difficult to predict.

Certificate of deposit is the least liquid type of account (CD). In a certificate of deposit, a bank customer deposits a lump-sum payment in the account, which can then be withdrawn after a set period of time. The interest rate on a CD is higher than on a regular savings account.

Non-liquid assets are those that can be difficult to liquidate quickly. Land and real estate investments are considered to be non-liquid assets because it can take months or more for an individual or a company to receive cash from the sale.