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Hypothecation |
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Hypothecation In banking, refers to the commitment of property to secure a loan. In securities, refers to the commitment of securities to serve as collateral for margin loans at the broker-dealer firm. Hypothecation. Hypothecation means pledging an asset as collateral for a loan. If you use a margin account to buy on margin or sell short, for example, you pledge securities (stocks, bonds, or other financial instruments) as collateral for the debt. If the brokerage firm issues a margin call that you don't meet, it can sell those securities to cover its losses. Similarly, if you arrange a mortgage on your home, you give the lender the right to sell your home if you fail to meet your obligation to make mortgage payments. Hypothecation may make it easier for you to secure a loan, but you do run the risk of losing the asset if for some reason you default on your obligation to repay according the terms of the agreement. How to thank TFD for its existence? Tell a friend about us, add a link to this page, add the site to iGoogle, or visit webmaster's page for free fun content. |
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Hypothecated taxes--taxes earmarked for a specific purpose such as health care spending--are attractive because polling shows the public is more willing to pay more when they know exactly where the money is going. The securities represented by this certificate have not been registered under the Securities Act of 1933 or the securities laws of any state and neither the securities represented by this certificate nor any beneficial interest therein may be sold, pledged, hypothecated or otherwise transferred except pursuant to an effective registration statement or as set forth in the certificate of designations, limitation, preferences and relative rights relating to the series NDC stock. The securities represented by this certificate have not been registered under the Securities Act of 1933 or the securities laws of any state and neither the securities represented by this certificate nor any beneficial interest therein may be sold, pledged, hypothecated or otherwise transferred except pursuant to an effective registration statement or as set forth in the certificate of designations, limitation, preferences and relative rights relating to the series NDC stock. |
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