A hypothecation agreement allows a broker-dealer to

By Investopedia AAA
A:

A. approve the client for "hot" IPOs.

B.
hold the margined securities in a street name loan - using the securities as collateral for other means (i.e. bank loans and short sales of other customers).



C. hold margined securities in mutual fund accounts and keep the dividends.



D. invest the client's proceeds from hypothetical dividends.



Answer: B
The Hypothecation agreement is an addendum to the margin agreement, and more often than not, is required by broker-dealers.



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