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Liquidation definition

Liquidation

In trading, this refers to he closing of an existing position through the execution of an offsetting transaction required because of insufficient funds. This generally occurs when the client’s funds fall below 50% of the required margin.

Liquidation can also be used in reference to corporations. If a company goes into liquidation, then its available assets are used to pay the outstanding obligations it has to creditors – and sometimes to investors. In most countries, shareholders will only receive assets once all creditors have been paid.

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