Final answer:
The ability of an asset to be quickly converted into cash with minimal impact on its value is called liquidity, which is the correct answer, e. liquidity. It is a key concept in finance, indicating how seamlessly an asset can be exchanged for cash.
Step-by-step explanation:
The asset's ability to be quickly converted into cash with minimal loss is known as liquidity. The correct answer is e. liquidity.
Liquidity is a crucial concept in economics and finance that describes how swiftly and effortlessly an asset can be exchanged for a medium of exchange, like cash, without affecting its market value. Cash is a highly liquid asset because it is readily accepted for transactions and purchases. In contrast, other assets like real estate are considered less liquid because they may take longer to sell and may result in a significant loss of value to quickly convert them into cash.
Financial instruments like checks or credit cards might not be as easily accessible as cash, but they still fall under the broader definitions of money because they offer certain levels of liquidity. They can still facilitate transactions, although not as directly as cash, making them less liquid than cash but still part of the spectrum of liquid assets.