Defining liquidty & Mark to Market

What is Liquidity:
1. The degree to which an asset or security can be bought or sold in the market without affecting the asset's price. Liquidity is characterized by a high level of trading activity. Assets that can by easily bought or sold, are known as liquid assets.
2. The ability to convert an asset to cash quickly. Also known as "marketability".
There is no specific liquidity formula, however liquidity is often calculated by using liquidity ratios.
1. It is safer to invest in liquid assets than illiquid ones because it is easier for an investor to get his/her money out of the investment.
2. Examples of assets that are easily converted into cash include blue chip and money market securities.

What Does Mark To Market - MTM Mean?
1. The accounting act of recording the price or value of a security, portfolio or account to reflect its current market value rather than its book value.
2. In terms of mutual funds, a MTM is when the net asset value (NAV) of the fund is valued upon the most current market valuation.
Investopedia Says
Investopedia explains Mark To Market - MTM
1. This is done most often in futures accounts to make sure that margin requirements are being met. If the current market value causes the margin account to fall below its required level, the trader will be faced with a margin call.
2. Mutual funds are marked to market on a daily basis at the market close so that investors have an idea of the fund's NAV.