Personal Financial Planning Practice Test

The principle that applies to Maiko's need to sell her rental property due to job loss emphasizes the importance of liquidity. In personal finance, liquidity refers to the ease with which an asset can be converted into cash without significantly affecting its value. In situations where an individual faces unexpected circumstances, such as job loss, having liquid assets or the ability to quickly access funds becomes crucial.

When Maiko is required to sell her rental property, it indicates she needs to convert her real estate into cash swiftly to meet her ongoing financial obligations or cover living expenses. This highlights the necessity of maintaining liquidity in her financial strategy, as it provides the flexibility to respond to sudden financial changes or emergencies. Selling an illiquid asset like real estate can be challenging and time-consuming, reinforcing why liquidity is a vital component of sound financial planning.

In contrast, the other principles like the importance of assets, risk management, and investment strategy involve broader concepts that don't specifically address the immediate need for access to cash in the context of an unexpected situation such as job loss.