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Liquidate is also a term used in bankruptcy procedures in which an entity chooses or is forced by a legal judgment or contract to turn assets into a " liquid " form cash. In finance, an asset is an item that has value. In the investments arena, liquidation occurs when an investor decides to close out his or her position on a particular asset or security. An investor that is long a stock may decide to sell some or all of the shares held in his portfolio for cash. Liquidating an asset is carried out when an investor or portfolio manager needs the cash to re-allocate funds or re-balance the portfolio.

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