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Liquidity measures how easily an asset can be exchanged for cash. Higher liquidity means faster conversion to cash; cash and stocks are typically highly liquid, while real estate is less so, especially during economic downturns. There are two contexts for liquidity: liquid market and liquid asset. A liquid market is characterized by a high trading activity where investors are always willing to trade securities at various price levels. A liquid asset can be easily turned into cash. Although there is no specific liquidity formula, common measures include the current ratio (current assets divided by current liabilities) and the quick ratio (current assets minus inventory, divided by current liabilities).