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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    The short term interest rate charged by banks on loans extended ...
  2. Hypothecation

    The established practice of a borrower pledging an asset as collateral ...
  3. Broker's Call

    The interest rate charged by banks on loans made to broker-dealers, ...
  4. Borrowing Power Of Securities

    The value associated with being able to invest in securities ...
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    1. The dollar amount in an existing margin account that is currently ...
  6. Maintenance Margin

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