Accounts & CustomersQuestion 76 of 125
In a margin account, the credit agreement, hypothecation agreement, and (optionally) the loan consent form together permit the firm to:
a.Guarantee the account against loss
b.Extend credit, take a lien on the customer's securities, and (with consent) lend out those securities
c.Make the customer a partner in the firm
d.Waive all margin requirements
Explanation
The credit (margin) agreement sets the terms of the loan, the hypothecation agreement lets the firm pledge the customer's securities as collateral, and the loan consent agreement (optional) allows the firm to lend the customer's securities to others. These documents are required to establish a margin account.
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