Collateral security

Generally, an asset suitable to reduce the risk attached to a loan (the characteristic of an asset assigned/pledged by a borrower to a lender as a form of credit enhancement designed to reduce the risk attached to lending it some money). – In particular, also the – deposit of money or securities, – pledging of receivables and movable property or – creation of mortgages for the provisional enforcement of rights such as a foreclosure or – for the defense of counter rights, for example the right of retention (lien: right of retention). Pursuant to Section 234 of the German Civil Code (BGB), securities may only be used to provide security in the amount of three quarters of their market value. – In the context of the assessment of securities, the fact that the sale value of a financial instrument in the respective currency is known precisely in advance. – With regard to leveraged buyouts, the ability of the target company to generate sufficient cash flow through success in the sales market to meet the payment obligations entered into with the financial investor. – See loan, secured, pledge, collateral, collateral retention, collateral money, underpinning., underpledge.

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University Professor Dr. Gerhard Merk, Dipl.rer.pol., Dipl.rer.oec.
Professor Dr. Eckehard Krah, Dipl.rer.pol.
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