What "liquidity" means in finance

Liquidity refers to the degree to which an asset or security can be easily bought or sold in the market without affecting its price. It is a measure of how quickly and easily an asset can be converted into cash without affecting its market value. High liquidity means that an asset can be sold quickly and easily, while low liquidity means that it may be difficult to sell the asset quickly without affecting its price. Liquidity is an important concept as it can impact the ability of investors to access cash quickly in times of need, and can impact the stability of financial markets.