Is liquidity helps profitability?

Question

Is liquidity helps profitability?

Answer 1

Well, being more liquid means you can move your money into a better deal if one comes available so if may indirectly help profitability.  Still if you looked at several highly liquid investments and several non-liquid investments I doubt you would find a correlation to profitability (possible a negative correlation ie the less liquid investments return better as they have to offer higher rates to attract the funds).  So, just a guess but I don't think a more liquid investment would be more profitable, maybe less (though again the extra convenience of higher liquidity may help you since you could move your funds into a better deal faster if one came up).