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It's even more obvious when you flip the relationship around. What's it called when your broker lends you money, at a fixed interest rate, for you to then go an
by plainnoodles 5y ago
It's even more obvious when you flip the relationship around. What's it called when your broker lends you money, at a fixed interest rate, for you to then go and invest in risk assets?
It's a margin loan. Which I hope I don't need to say is NOT risk-free.
- SilasX 5y agoFair point, but when you take a margin loan, you also don’t have to register it as a security.
- mandevil 5y agoBut the broker-dealer who made the margin loan is extremely heavily regulated by the SEC- margin loans are some of the things that they have the longest history with!
- SilasX 5y agoI know, just saying it's not a good example to make the point about "risk of loss implies need to register as security".