Loan Officer Practice Exam

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Which of the following is NOT considered a liquid asset?

Rent credit
Mutual fund
Stock or bond
Certificates of deposit

The correct answer is: Rent credit

A liquid asset is typically defined as an asset that can be easily and quickly converted into cash without a significant loss of value. In this context, rent credit does not meet this criterion, as it cannot be directly converted into cash like the other options listed. Rent credit refers to the value that a tenant can apply towards future rent, often used in rental agreements as an incentive or benefit. This value is not readily available as cash and may have specific conditions attached to its use or redemption. On the other hand, mutual funds, stocks, bonds, and certificates of deposit can usually be sold or liquidated relatively quickly on the financial markets or through financial institutions, allowing access to cash in a short period. Thus, these other options are considered liquid assets due to their ability to be transformed into cash with minimal hassle.