Liquidity is having enough purchasing power/cash, given our needs. This is the liquidity from the angle of an individual or institution. Being liquid for an individual or institution means it has enough cash in hand to meet immediate needs.
Liquidity of an asset is its ability to convert into another form (good/service) without cost. For example, money is the most liquid of all assets. When we exchange money to get a commodity, we need not give any commission for exchanging money. But when we pay by using gold or government securities, certain commission/fees were will be reduced to complete the payment.
