From 11:00PM PDT on Friday, July 1 until 5:00AM PDT on Saturday, July 2, the Shmoop engineering elves will be making tweaks and improvements to the site. That means Shmoop will be unavailable for use during that time. Thanks for your patience!
We have changed our privacy policy. In addition, we use cookies on our website for various purposes. By continuing on our website, you consent to our use of cookies. You can learn about our practices by reading our privacy policy.
© 2016 Shmoop University, Inc. All rights reserved.

Finance Glossary

Just call us Bond. Amortized bond.

Over 700 finance terms, Shmooped to perfection.

Hypothecation Agreement

Definition:

Pretty much a margin agreement.

Someone (we're not naming names) wants to start investing but doesn't have enough cash for all the investments they want to scoop up. So, they use the stocks or securities they buy as collateral to borrow money to invest.

If the investments make money and the investor can pay back the cash, all is well and good. If the investor can't make good on the loan for some reason, the lender can grab up those stocks or securities.