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hypothecation agreement

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Financial Dictionary

hypothecation agreement

A written agreement between a customer opening a margin account and a brokerage firm that pledges stock in the account as collateral for margin loans. The brokerage firm is permitted to sell the stock in the event that equity in the account falls below a stipulated level.

Wall Street Words: An A to Z Guide to Investment Terms by David L. Scott.
Copyright © 2003. Published by Houghton Mifflin.
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