Answer: A certificate of deposit usually has limited liquidity.
Explanation:
Liquidity refers to availability of cash in order to meet short-term operating needs. It means the degree by which an asset can be bought or sold on time without affecting the price of the asset. Cash is the most liquid asset.
A certificate of deposit refers to savings certificate issued by commercial banks which has a fixed maturity date and fixed interest rate. It limits access to funds till the maturity date of the investment.
