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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. So 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 could borrow up to $7.5 m...

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