Certified Financial Planner (CFP) Exam 2025 – 400 Free Practice Questions to Pass the Exam

Liquid assets are those that can be quickly and easily converted to cash without a significant loss in value. Money market mutual funds are considered highly liquid because they are designed to maintain a stable value and can typically be accessed readily, often within a day or two. They provide an alternative to traditional savings, offering relatively easy access to funds while providing some interest earnings.

In contrast, certificates of deposit (CDs) have a specific term before they mature and withdrawing funds early usually incurs penalties. Collectible art may take considerable time to sell and its value can fluctuate widely, making it less liquid. An automobile, while it can be sold, is not as liquid as money market mutual funds due to the time and effort required to sell it, along with potential depreciation in value. Hence, money market mutual funds stand out as the most liquid asset among the options given.