liquidity
liquidity questions and answers
Learn about liquidity at the number one young investor website Teen Analyst.
Q: What is the difference between liquidity and capital?
Also can you clear up what liquidity actually is, i having a little hard time understanding it. Is it the movement of assets/cash?
A: Liquidity is the availability of the capital. For instance, you might have $10,000 in a checking account and $10,000 in a 60 month CD. The money in the checking account is more liquid because you have instant access to it, whereas the money in the CD is more out of reach. You can get it if you pay some penalties, but it is more complicated (and takes more time) than just getting money from your checking account. Also, you might have capital invested in real estate, but if you needed cash right away, you would first have to sell the property to get the cash. If the real estate market is bad (like right now), that cash is going to be hard to get. Even if you do sell, it takes time to go through the closing process, etc.
Q: What is the general thickness or liquidity of a good curry? As thick as a gravy or like a thin sauce?
In a debate with a friend as to wondering what thickness or thinness is considered a good curry in the common cuisine. My friend says it should be very liquidy in order to accommodate pouring it over rice. However I think it should be far more thicker like a sauce that can coat the back of a spoon.
A: All curries vary - dry curries obviously have very little liquid - to sloppy curries. There's too many different types to generalise on a consistency. Sooooo, you're both right!!
Q: What type of work will the bail out and liquidity of the banks create?
How many jobs are created in a population that has just as many people dieing as there are people being born in the USA? Around the year 2025, 80ty after the WW2 the economy will be very poor. It is another of one of those economic question.
A: It will create 0 jobs, but it will create conditions for jobs to continue to be created. Conversely, doing nothing will guarantee a recession, probably followed by a depression, money might become worthless, companies would lay people off or go out of business. This is not an initiative to improve our economy, rather one to protect it.
I take that back, it might create a small number of administrative jobs for people to work with Paulson to go about carrying out this plan (I'd estimate no more than 100 jobs).
Q: What is a good way to invest money, something with high liquidity?
I have a tax deferred annuity...which I get taxed the heck out of if I try to take money out before I'm 59 1/2 years old (i'm 25 right now). I want to continue saving long term but do need an emergency money fund. What is the best way to grow my money but be able to take it out whenever I want without penalites.
A: A money market account would be one way, and another good way would be a CD the only thing with CD's are they usually require a minimum amount of money and they usually require you to put it in for a minimum amount of time 3 months is usually the shortest term. The interest rates are usually better than a savings account. However there is always INGDirect.com which is a online bank that offers really good interest rates on savings accounts.
Q: What is the best way to rollover a 401k and keep liquidity?
I would like to take cash at time of rollover. I know that will be taxable. I am 62 years old and had to take early retirement. I only have my SS income.
A: if you do not have a brokerage firm get one (i use Edward Jones) roll over everything to the account -- than figure out how much you want each month -- 2 years worth in there money market == invest 2nd thru 5th each into ladder cds with dividends going into the money market to have for a rainy day fund -- put the rest in to good corp bonds and mutual funds== i did this at 59.5 and never looked back i am now 67 -- i get over 13K a year out and my fund has been growing each year!!!
Q: How are some here actually buying the line of bull about liquidity?
Liken it to codependency. With the passage of this bill "we" are allowing destructive actions by lenders to continue.
A: Where do you keep your money? A bank.
Where do you get your mortgages? A bank.
Where do you get your car loans? A bank.
Where do you get your student loans? A bank.
Where do you get your credit cards for emergencies? A bank.
Yeah...why would we ever want to bail out the banking system? I mean...it couldn't possibly impact every American if the system collapsed...
Q: What is the difference between solvency and liquidity?
I'm confused. If they have money (are solvent) why to they need more money to pay their bills?
A: Dont listen to the doctor, liquidity is how easily an asset can be turned into cash.,
Q: How could lower Fed interest rate affect the liquidity crisis?
what are the negative and the positive economical effects of this act? what are the short- and long-term effects?
thank you
A: A lower interest rate would allow easier borrowing, so cash (extremely liquid) is more available to firms.
The downside is that all of this cash being spent would lead to higher prices (inflation).
In the long term, this would result in no higher economic growth, but lasting inflation.
Q: How do mergers and acquisitions affect a company's liquidity, share price?
In general terms, for the larger company, who is acquiring or in the case of a merger (such as Symantec-VERITAS), how is the comapany's financial ratios and statistics affected? E.g how would Symantec's stats be affected in the example above.
I am looking for generic answers here, or use of the above example. General points on what may happen in the case of mergers and acquisitions.
Thanks in advance, for your time. Any help would be much appreciated.
A: In many cases the acquiring company's share price and liquidity are negatively affected. The reason is simple, the acquiring company has just expended assets on a business venture that has an uncertain outcome.
If the acquiring company is able to integrate the acquired company's strenghts with its own, the upside will be much better than organic growth would allow in the same time period.
That said, the ability to fully integrate seems a feat beyond the reach of even very good companies.
For failed acquisitions look at Quaker Oats acquisition of Snapple a few years ago. Once they had Snapple in house they were totally unprepared to leverage the asset.
For successes look at Nature's Bounty roll up of so-called "natural products" manufacturers. Very well done indeed.
Q: How you can insert liquidity to a stock market?
Meaning how a stock market could be succesful and bigger.
A: Via more bussines and investors
Q: Can you get high by injecting liquidity?
I keep hearing central banks are injecting liquidity, are all these bankers smack heads? Should someone tell the police?
A: You MUST be rich to get these kinds of injections.
Q: What are the short and long-term consequences of the federal reserve injecting liquidity into the markets?
The Fed has said it will pump as much money as necessary to prevent a credit crisis. That's meant to sound reassuring, but surely the government cannot continue to spend, borrow, and extend credit the way it has been indefinitely? What will be the ramifications if this trend continues?
A: the federal reserve is a private bank they are in total monetary control of the country just like the bank of england is in england and so on. the name is deceiving to make people think its a goverment agency operating in the peoples interest. the more money they pump into the economy the less your dollar will be worth. there are some very good documentarys made on the subject for example if you go to a website called eternalyalone there is an exelent movie on the bottom of the page called money masters "history of the zionist takeover of the banking system" i think when you find out the truth about this subject its going to make you mad but also you will know whats really going on in the world. also check out zionizm on youtube...vote for Ron Paul he will put a stop to the fed and save america from bankrupcy.
Q: What is a simple and easy definition of "Liquidity" and how it is involved in the current crisis?
Please use simple words, lol, I know I sound stupid but all these different sources have different meanings.
A: The ability to transform assets into cash. Banks have assets which no one wants to buy because no one knows how much they are worth, thus it is hard to convert them into cash.
Same with houses, in this market it is difficult to sell them because no one wants to catch a falling knife.
Q: Which is more important to the economy - keeping the dollar strong or ensuring liquidity?
The Fed will probably lower interest rates again today, to alleviate the credit crunch. But lower rates could spur inflation, and cause the dollar to further weaken abroad.
Are we between a rock and a hard place? Which goal is more important? What's the best course going forward?
Thanks.
A: liquidity. if the US financial institutions die, there will be a systemic failuire in the international financial market. that would be chaos much more than a weaker US$.
Q: the effects of a lack of liquidity are evident to us now, but what causes a lack of liquidity for banks IE RBS?
I know what liquidity is and the effects it has on people personally, but i cant get my head around, what causes a lack of liquidity for major and minor banks - is a lack of liquidity responsible for northern rock etc
A: Put simply, each bank has a box full of cash.They lend this out with interest, to make more money.After lending all their cash out, they COULD borrow from other banks , however, the other banks had all done the same, so, now they were all short of cash.Over lending, with expectation of high profits, was the start of their problems,and the people who had borrowed were in the same position, as they could not repay the loan.Money just stopped being available to anyone.