Pledged Asset

AAA

DEFINITION of 'Pledged Asset'

An asset that is transferred to a lender for the purpose of securing debt. The lender of the debt maintains possession of the pledged asset, but does not have ownership unless default occurs.

INVESTOPEDIA EXPLAINS 'Pledged Asset'

A pledged asset is returned to the borrower when all conditions of the debt have be satisfied.

Home buyers can sometimes pledge assets, such as securities, to lending institutions in order to reduce the necessary down payment. Thus, these securities would not have to be sold in order to meet the down-payment requirements, allowing for any capital appreciation while maintaining the associate mortgage benefits.

RELATED TERMS
  1. Mortgage

    A debt instrument, secured by the collateral of specified real ...
  2. Capital Appreciation

    A rise in the value of an asset based on a rise in market price. ...
  3. Collateral

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

    The established practice of a borrower pledging an asset as collateral ...
  5. Default

    1. The failure to promptly pay interest or principal when due. ...
  6. Loan

    The act of giving money, property or other material goods to ...
Related Articles
  1. The Importance Of Your Credit Rating
    Credit & Loans

    The Importance Of Your Credit Rating

  2. The Reverse Mortgage: A Retirement Tool
    Options & Futures

    The Reverse Mortgage: A Retirement Tool

  3. Bond Basics Tutorial
    Retirement

    Bond Basics Tutorial

  4. What You Need To Know About Preferred ...
    Trading Strategies

    What You Need To Know About Preferred ...

comments powered by Disqus
Hot Definitions
  1. Due Diligence - DD

    1. An investigation or audit of a potential investment. Due diligence serves to confirm all material facts in regards to ...
  2. Certificate Of Deposit - CD

    A savings certificate entitling the bearer to receive interest. A CD bears a maturity date, a specified fixed interest rate ...
  3. Days Sales Of Inventory - DSI

    A financial measure of a company's performance that gives investors an idea of how long it takes a company to turn its inventory ...
  4. Accounts Payable - AP

    An accounting entry that represents an entity's obligation to pay off a short-term debt to its creditors. The accounts payable ...
  5. Ratio Analysis

    Quantitative analysis of information contained in a company’s financial statements. Ratio analysis is based on line items ...
  6. Days Payable Outstanding - DPO

    A company's average payable period. Calculated as: ending accounts payable / (cost of sales/number of days).
Trading Center