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How easily an asset can be turned into cash without a big price change.
Liquidity describes how quickly and easily something can be turned into cash without changing its price much. Cash is perfectly liquid; large stocks are very liquid; a house or a rare collectible is not.
You can sell $1,000 of a large company's stock in seconds near the last price; selling a house can take months.
Illiquid assets can be hard to sell when you need money, and their prices can drop sharply when many people try to sell at once.