Banking Practice Exam 2025 – 400 Free Practice Questions to Pass the Exam

The choice of real estate as the investment type most likely to have lower liquidity is accurate due to the nature of how property transactions work. Liquidity refers to how quickly an asset can be converted into cash without significantly affecting its price. Real estate typically involves a lengthy transaction process that includes finding a buyer, negotiating terms, passing legal inspections, and completing formalities that can take weeks or even months. This process makes it less liquid compared to other investment types.

In contrast, stocks and bonds can often be traded quickly in the market, facilitating immediate access to cash. Stocks can be bought and sold during market hours and may have numerous buyers, ensuring a quicker sale. Bonds, while they may take slightly longer than stocks in some cases, are typically more liquid than real estate due to established markets that support their trading.

Cash, being the most liquid asset, is readily available for transactions and does not require conversion, making it the simplest to access immediately. Given this framework, real estate stands out as an investment with significantly lower liquidity relative to these other options.