With respect to an asset, liquidity refers to the ability to exchange an asset without substantially changing its price in the process, and the ease with which an asset can be converted to cash. The easier it is to convert the asset to cash, the more liquid the asset will be. With respect to markets, liquidity refers to the amount of business activity in a market. The higher the trading volume on the market, the more liquid the market will be. Liquid markets tend to increase the liquidity of assets.