Question of the Week

When evaluating an individual's current financial status, liquid net worth would be identified as:

A) Real property and other tangible assets
B) Assets that can be easily converted into cash
C) The same as total net worth
D)

Answer:

The correct answer is B).

Total net worth is defined as all assets minus all liabilities. Liquid net worth is all assets that can be easily converted into cash. Checking, savings and money-market accounts can be easily converted into cash, along with other assets like equities and securities.