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20. Consider two assets: (1) a vast plot of land in West Texas which includes a...

20. Consider two assets: (1) a vast plot of land in West Texas which includes a cow ranch, and (2) a giant financial portfolio consisting mostly of mutual funds. Which asset is more liquid?

a. both assets are equally liquid

b. the financial portfolio consisting mostly of mutual funds

c. the land holdings in West Texas including the ranch

d. neither is liquid; they are both consists mostly of solid matter

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Answer #1

Ans.-(B)

Liquid assets are those assets which can be converted to cash quickly without incurring much cost.

Portfolio consisting mostly of mutual funds will be more liquid because many liquid funds allow the withdrawal of funds anytime at a negligible charge. So, mutual funds can be sold quickly.

On the other hand, if may take a long time to sell a plot of land.

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