How is liquidity defined concerning annuities?

Liquidity in the context of annuities refers to the ability to access funds quickly and without incurring penalties. Annuities often come with specific features or restrictions that can affect how easily the investor can withdraw funds. The term encompasses the overall ease of accessing cash, which is particularly important for consumers who may need to utilize their investment for unexpected expenses or emergencies.

In this scenario, option B captures the essence of liquidity by emphasizing both the speed of access to funds and the avoidance of penalties, which aligns with the primary concern investors have regarding their ability to tap into their capital when necessary. The other options, while related to investment capabilities, do not fully encapsulate the primary aspects of liquidity as it pertains to both time and cost associated with accessing the funds. This makes option B the most accurate definition in this context.