Consider the following liquid assets:1. Demand deposits with the banks2. Time deposits with the banks3. Savings deposits with the banks4. Currency The correct sequence of these assets in the decreasing order of liquidity is
✓ Correct answer: d) 4–1–3–2
ExplanationOption (d) is correct: Liquidity refers to how quickly an asset can be converted into cash without significant loss of value.Higher liquidity means faster conversion into spend- able money.The correct order of liquidity for the given as- sets is (Most Liquid) Currency → Demand Deposits → Sav- ings Deposits → Time Deposits (Least Liquid).Asset Type Explanation1. CurrencyCash is the most liquid asset as it can be used immediately without conversion.Physical cash (notes & coins) is immediately usable for transactions.No need for conversion, accepted universally.2. Demand DepositsFunds in current accounts can be withdrawn anytime without notice.Can be transferred using cheques, online banking, or ATMs.Liquidity: Very High, just below currency.3. Savings DepositsMore liquid than time deposits but less liquid than demand deposits.Withdrawal limits exist (e.g., max withdrawals per month).Liquidity: Moderate.4. Time DepositsIncludes Fixed Deposits (FDs) and Recurring Deposits (RDs).Money is locked for a fixed term.Premature withdrawal leads to penal
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