Question 8 (1 point) Liquidity refers to your ability to cover any long-term cash deficiencies. True False

## Step 1<br />Liquidity is a term used in finance to describe the ability of an asset to be quickly converted into cash without affecting its market price. This means that a liquid asset can be sold quickly and easily, without causing a significant change in its price.<br /><br />## Step 2<br />The statement in the question is incorrect because it confuses liquidity with solvency. Solvency refers to the ability of a company to meet its long-term financial obligations.<br /><br />## Step 3<br />Liquidity, on the other hand, is about the ability to quickly convert assets into cash to meet short-term obligations. This means that liquidity is about the ability to cover short-term cash deficiencies, not long-term ones.