The word liquidity can refer to a number of different concepts dependent upon the context in which it is placed. Perhaps it's most familiar usage is that in which it describes the ease with which an asset can be bought or sold, be the asset in question a real one (e.g. a house) or a financial one (e.g. a bond). This usage also extends to the effect which such a purchase or sale has upon the price of an asset, i.e. the more liquid an asset, the lesser the effect of trading activity upon its fundamentals. This is known as 'asset' liquidity.