ShmoopTube

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Finance a la shmoop what is liquidity all right liquidity is

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not this but liquidity is this alright liquidity or being liquid is the ability [A pool of water]

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to pay for things with cash and in some parts of the world

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moose pelts most pelts get your moose belt here five for a dollar you might own 4,000 acres of [Man wearing a hat stood by his land]

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land in Alaska most your neighbors are well

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moose but when you go into your local Ford dealer to buy a Ford f-150 with the

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pimped-out tires and the intentionally off-road package the dealer wants to be [Man purchasing a Ford F150]

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paid in cash not in Moose pelts. if you sold those pelts for cash and then paid

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him and then you'd be liquid like the rest of the moose well in the real world [A table full of moose juice]

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liquid things are stuff like stocks and publicly traded bonds and anything you

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can find on eBay that'll turn into cash in less than a week or so original [Website showing Barbie doll and car for sale]

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edition of Avengers comic yeah the one where Iron Man and Captain America share

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their first kiss and that that one's as good as sold now on the flip side of the [Coin flipped]

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coin long term investments like funding two kids in a garage who are building a

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search algorithm with likely 10 years or more before an IPO [Kids using a computer in a garage]

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yeah those investments are highly illiquid as in the opposite of cash

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immediately on hand because there are rarely any other buyers of the private [Man playing the piano to a crowd]

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company shares you bought when you invested in them at least not buyers for

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a long illiquid time meaning that most people simply won't give you cash for

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shares in a company with no profits little don't know revenues or even no [Graph of profits and revenue for a company]

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website. So is your home liquid? err not so much but you can borrow against

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it liquidly in other words sometimes

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illiquid things can allow you to have liquidity you know like if you have a [Man stood by a home holding a mortgage paper]

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mortgage of say a hundred grand on a home that's probably worth well over

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half a million bucks then any bank will most likely let you borrow a couple

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hundred grand pretty much at any time you want [Man borrowing home owner more money]

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if you pledged the home as collateral in other words if you don't pay the bank

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back they're going to start parking in your garage and pickin out drapes for [Car reversing into garage]

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the living room as they repossess it to pay off the money you borrowed from them [Bank man repossessing the home]

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promising to pay it back well fortunately this isn't a chemistry course so

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there's no need to learn about the solidity and gas-idity[Examples of solids and gas]

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