The ability of a security holder to convert a security to cash or to a security that is the equivalent of cash. Different assets have different levels of liquidity ranging from highly liquid assets such as letters of credit, certificates of deposit, or money market funds, to relatively illiquid assets such as restricted securities or real estate. Unlike securities in a public company that an investor can convert to cash by selling at any time, restricted securities in a private company can be converted to cash only under limited circumstances (generally on an IPO, sale, redemption, or private sale to another stockholder).