An illiquid asset cannot serve as a: A) medium of exchange. B) unit of account. C) store of value. D) store of wealth.

Question

Mckayla Villa

Business

15 May, 15:02

An illiquid asset cannot serve as a: A) medium of exchange. B) unit of account. C) store of value. D) store of wealth.

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Answers (1)

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Jocelyn Arnold · Answer 1

A) medium of exchange.

Explanation:

Illiquid assets are securities or assets that are difficult to sell due to shortages of interested buyers. Lack of an established market for some assets makes them illiquid. Illiquid assets do not convert to cash easily. They risk losing a sizable percentage of their value if converted to cash.

Illiquid assets cannot be used as a medium of exchange because exchanging them with other goods and services will be difficult. Illiquid assets are not frequently traded, which makes it hard to determine their market value. Without a definite market value, it will be a challenge to use illiquid assets as a medium of exchange.