Which of the following assets generally has the least liquidity risk?

Time deposits typically exhibit the least liquidity risk among the options listed. Liquidity risk refers to the potential difficulty of converting an asset into cash without significant loss in value. Time deposits, also known as certificates of deposit (CDs), are investments made with banks for a fixed term at a specified interest rate. Because they are insured by government agencies (like the FDIC in the United States) up to a certain limit, they retain their full value and are predictable in their return.

While stocks offer relatively high liquidity in most markets, they can experience significant price fluctuations which contribute to greater liquidity risk, especially in volatile market conditions. Real estate is infamously illiquid because it can take considerable time to sell, and the sale usually involves substantial transaction costs. Mutual funds, depending on type, can generally be liquidated quickly compared to stocks and real estate; however, they might still be subject to redemption fees or delays.

As such, time deposits provide a structured and stable investment that minimizes liquidity risk when compared to the other asset types listed.