Collateral is property or other assets that a borrower offers a lender to secure a loan. If the borrower stops making the promised loan payments, the lender can seize the collateral to recoup its losses.
The term "cost basis" refers to the original value of a security you own. When you sell a stock, bond or mutual fund, you use the cost basis to determine your profit or loss, which in turn affects the amount of tax you owe.
There are multiple methods for determining one's cost basis, one of which is the "first in, first out" method or FIFO.
A line of credit is an arrangement where a bank offers a maximum loan amount that the borrower can draw upon at any time. The borrower – which can be an individual, business or government entity – has the flexibility to take out as much as they want, up to the maximum amount.
Lines of credit have a couple of important advantages.