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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RELATED TERMS
  1. Hypothecation

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

    The interest rate charged by banks on loans made to broker-dealers, ...
  3. Collateral

    Property or other assets that a borrower offers a lender to secure ...
  4. Call Loan

    A loan provided to a brokerage firm and used to finance margin ...
  5. Non-Purpose Loan

    A type of loan that uses an investment portfolio as loan collateral ...
  6. Collateral Value

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