pledged asset

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Related to pledged: Pledged Assets

Pledged Asset

An asset that a borrower transfers to the possession of a lender as collateral for a loan. The borrower maintains ownership and all associated rights of the pledged asset. When the loan is repaid, the lender transfers possession back to the borrower. The pledged asset reduces the risk to the lender that the borrower will default, therefore possibly qualifying the borrower for some benefit, such as a lower interest rate. When buying a house, some mortgage borrowers will pledge an asset, such as stock, to the lender to qualify for a lower down payment. See also: Secured loan.

pledged asset

An asset used as security for a loan.
References in periodicals archive ?
2003-7 involved a VPF with standard commercial terms similar to the VPF described above, with one notable exception: the counterparty in the ruling did not have the right to borrow the underlying shares pledged by the counterparty.