What Is the Meaning of Securitization?

what is the meaning of liquid assets


The ease with which an asset can be converted to cash without losing value is called "liquidity." Gold, for example, is extremely liquid: If you have an ounce of gold, you can take it to a metals dealer, who will gladly pay you the going rate for it. Assets that aren't easily converted to cash are "illiquid." Real estate is a generally illiquid asset. If you want to cash it in, first you have to find a buyer -- not always an easy task -- and then you have to negotiate a price. And the greater your need to sell, the more likely you are to sell the property at a discount.


The mortgages that banks and other financial institutions have on their books are valuable assets, but they're generally illiquid. These loans are backed by

real estate, which is itself illiquid, and while a mortgage produces a healthy rate of return -- in the form of interest paid by the homeowner -- it can take as long as 30 years to realize the full value.




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    Source: homeguides.sfgate.com

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