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Closed- vs. Open-Ended Terms

Closed- vs. Open-Ended Terms

In the case where these kinds of collateral are being used to secure a bond, obviously there are limits or ceilings formed by the value of the collateral. If a bottle stamper sold new for $25 million, it might fetch $10 million in the used market...maybe. A cautious lender would likely limit the amount that could be borrowed against that asset pledge. The lender could attach to the loan the requirement that it was closed-ended: loans of that given type or class can borrow up to $7.5 million,...

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