Examples of Liquid assets in the following topics:
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- M2 is a broader measure of the money supply than M1, including all M1 monies and those that could be quickly converted to liquid forms.
- Narrow measures include only the most liquid assets, the ones most easily used to spend (for example, currency and checkable deposits).
- Broader measures add less liquid types of assets (certificates of deposit, etc.).
- M2 consists of all the liquid components of M1 plus near-monies.
- Near monies are relatively liquid financial assets that may be readily converted into M1 money.
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- It is not uncommon for immigrants to liquidate their assets, potentially at a substantial loss, to be able to afford to move.
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- In economics, the demand for money is the desired holding of financial assets in the form of money (cash or bank deposits).
- This is the equivalent of stating that the nominal amount of money demanded (Md) equals the price level (P) times the liquidity preference function L(R,Y)--the amount of money held in easily convertible sources (cash, bank demand deposits).
- Specific to the liquidity function, L(R,Y), R is the nominal interest rate and Y is the real output.
- However inherent to the holding of money is the trade-off between the liquidity advantage of holding money and the interest advantage of holding other assets.
- While the demand of money involves the desired holding of financial assets, the money supply is the total amount of monetary assets available in an economy at a specific time.
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- M1 captures the most liquid components of the money supply, including currency held by the public and checkable deposits in banks.
- A broader measure of money than M1 includes not only all of the spendable balances in M1, but certain additional assets termed "near monies".
- The broader category of money that embraces all of these assets is called M2.
- M3 encompassed M2 plus relatively less liquid near monies.
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- In economics, the demand for money is the desired holding of financial assets in the form of money.
- The demand for money is a result of the trade-off between the liquidity advantage of holding money and the interest advantage of holding other assets.
- The level of nominal output has increased and there is a liquidity advantage in holding on to money.
- The nominal interest rate declines and there is a greater interest advantage in holding other assets instead of money.
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- In economics, capital (also referred to as capital goods, real capital, or capital assets) references non-financial assets used in the production of goods and services.
- Interest is a fee that is paid by a borrower of assets.
- It is a form of compensation for the use of the assets.
- Financial Capital is capital that is liquidated as money for trade, and owned by legal entities.
- It is a form of capital assets that is traded in financial markets.
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- Further, this type of financial crisis meant that banks' assets were suddenly worth far less; open market operations can ensure that these banks have the liquidity they need to carry out their financial activities.
- The Term Asset-Backed Securities Loan Facility uses the primary dealers to give companies access to loans based on asset-backed securities, such as those related to credit card or small business debt.
- These new credit facilities were created based on the hope that increasing liquidity in the market would induce firms and consumers to borrow and spend.
- Investors, banks, and other financial institutions came under pressure as their mortgage-based assets lost value.
- The Fed provided credit to these institutions in an attempt to mitigate the effect of falling asset prices and stem the crisis.
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- It is intended to slow economic growth and/or inflation in order to avoid the resulting distortions and deterioration of asset values
- The discount window allows eligible institutions to borrow money from the central bank, usually on a short-term basis, to meet temporary shortages of liquidity caused by internal or external disruptions
- All banks are required to have a certain amount of cash on hand to cover withdrawals and other liquidity demands.
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- The capital account acts as a sort of miscellaneous account, measuring non-produced and non-financial assets, as well as capital transfers.
- The first is a broad interpretation that reflects the net change in ownership of national assets.
- The capital account can be split into two categories: non-produced and non-financial assets, and capital transfers.
- Non-produced and non-financial assets include things like drilling rights, patents, and trademarks.
- Capital transfers include debt forgiveness, the transfer of goods and financial assets by migrants leaving or entering a country, the transfer of ownership on fixed assets, the transfer of funds received to the sale or acquisition of fixed assets, gift and inheritance taxes, death levies, and uninsured damage to fixed asset.
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- In finance, the capital asset pricing model (CAPM) is used to determine the required rate of return of an asset, taking into account an asset's sensitivity to non-diversifiable or systematic risk.
- Non-diversifiable risk is noted by the variable beta (β), where beta is greater than one if the asset's price sensitivity is greater than the market; equal to one when the asset's sensitivity is equal to the market; and less than one if the asset exhibits less pricing volatility than the market.
- The expected return of an asset is equal to the risk free rate plus the excess return of the market above the risk-free rate, adjusted for the asset's overall sensitivity to market fluctuations or its beta.
- Mathematically, the capital asset pricing model can be written as: E(Ri) = Rf + β(E(Rm) - Rf), where R is the return, E(R) is the expected return, i denotes any asset, f is the risk-free asset, and m is the market.
- The SML essentially graphs the results from the capital asset pricing model formula.