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LSDefine
Simple English definitions for legal terms
margined security
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A quick definition of margined security:
A margined security is something that you give to someone to make sure you will pay them back if you borrow money or credit from them. It can be something like a stock or a bond that shows you have a right to something else. It's important to make sure the person or company you give the margined security to is trustworthy and will give it back to you when you pay them back.
A more thorough explanation:
A margined security is a type of collateral that is pledged to guarantee the fulfillment of an obligation. This means that if someone borrows money, they may have to put up a margined security to ensure that they will pay back the loan with interest.
For example, let's say that John wants to borrow $10,000 from a bank to start a business. The bank may require John to put up a margined security, such as stocks or bonds, to ensure that he will pay back the loan. If John fails to pay back the loan, the bank can sell the margined security to recoup their losses.
Another example of a margined security is when someone buys stocks on margin. This means that they borrow money from a broker to buy stocks, and the stocks themselves serve as the margined security. If the value of the stocks drops, the broker may require the investor to put up more margined securities to cover the losses.