What does the term liquidity mean?

1. What does the term liquidity mean? Which would be more important to a firm that held a portfolio of marketable securities as a precautionary balance against the possibility of losing a major lawsuit—liquidity or rate of return? Explain.
2. Firm A's management is very conservative whereas Firm B's is mom aggressive. Is it true that, other things the same, Firm B would probably have larger holdings of marketable securities? Explain.