Which of the following best defines a liquid asset?

A liquid asset is best defined as assets that can be quickly converted to cash. This characteristic is crucial for individuals or businesses that need immediate access to funds to cover expenses or seize opportunities. Liquid assets are typically cash or items that can be swiftly sold in the market without significantly affecting their value, such as stocks, bonds, and some types of mutual funds.

The nature of liquid assets is that they provide financial flexibility and security, as having readily available cash or cash-equivalent resources enables one to respond quickly to financial needs or emergencies. In contrast, other options describe assets that either lack this immediate convertibility to cash or blend different types of assets without specifying liquidity. For example, an investment requiring several years to mature or a non-cash asset that cannot be easily sold would not meet the criteria of liquidity, as they cannot be quickly turned into cash.