4)Stuart purchased 300 shares of Microsoft stock which he has pledged to his broker as collateral...
4)Stuart purchased 300 shares of Microsoft stock which he has pledged to his broker as collateral for the loan in his margin account. This process of pledging securities is called:
margin calling.
hypothecation.
leveraging.
maintaining the margin.
street securitization.
Homework Answers
4) The correct option is option B.
THE PROCESS OF PLEDGING SECURITIES IS CALLED "HYPOTHECATION".
Hypothecation occurs when an asset is pledged as collateral to secure a loan, without giving up title, possession or ownership rights, such as income generated by the asset.
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