Question

TRUE/FALSE. bottles of very fine wine are less liquid than demand deposits.

Answer 1

The statement is true; demand deposits are more liquid than fine wine because they can be quickly and easily converted into cash. Fine wine is less liquid due to the time and effort needed to find a buyer.

Step-by-step explanation:

The statement "bottles of very fine wine are less liquid than demand deposits" is TRUE. Liquidity refers to how quickly and easily an asset can be converted into cash without significant loss of value. A demand deposit, such as a checking account, is highly liquid because it can be readily accessed and used for transactions. On the other hand, selling very fine wine may take longer and require more effort to find a buyer willing to pay the desired price, making it less liquid than demand deposits.

Answer 2

The TRUE statement that bottles of very fine wine are less liquid than demand deposits refers to the relative ease of converting assets into cash, with demand deposits being more liquid.

Step-by-step explanation:

The statement "bottles of very fine wine are less liquid than demand deposits" is TRUE. In financial terms, liquidity refers to how quickly and easily an asset can be converted into cash without losing value. Demand deposits, often found in checking accounts, are highly liquid because they can be easily withdrawn and used for transactions. In contrast, very fine wine, as an asset, would take more time to convert into cash because you'd need to find a buyer within the market who is willing to pay for its value. This process is not instant and thus makes it less liquid compared to demand deposits.