HYPOTHECATION Meaning and
Definition
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Hypothecation is a legal and financial term that refers to a process where an asset, typically immovable property or securities, is pledged as collateral to secure a loan or debt. It involves the transfer of ownership of the asset to the lender temporarily until the repayment of the debt.
In this process, the borrower retains possession and control of the property but grants a lien or charge over it to the lender. The lender has the right to take possession or sell the property if the borrower defaults on the loan. The hypothecation agreement usually outlines the terms and conditions of the loan, including interest rates and repayment terms.
Hypothecation is commonly seen in various financial transactions, such as mortgages, where a property is used as collateral for a housing loan. It is also prevalent in the context of margin trading, where the securities or investments held by an investor are hypothecated to the broker providing the margin.
The purpose of hypothecation is to provide security to lenders or creditors in case of default by borrowers. By having a claim on the pledged asset, lenders have a means to recover their funds, reducing the risk associated with lending. Hypothecation is a legal mechanism that protects the rights of both borrowers and lenders in financial transactions involving pledged assets.
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The pledging of a ship or goods for advances made.
Etymological and pronouncing dictionary of the English language. By Stormonth, James, Phelp, P. H. Published 1874.
Common Misspellings for HYPOTHECATION
- gypothecation
- bypothecation
- nypothecation
- jypothecation
- uypothecation
- yypothecation
- htpothecation
- hgpothecation
- hhpothecation
- hupothecation
- h7pothecation
- h6pothecation
- hyoothecation
- hylothecation
- hy-othecation
- hy0othecation
- hypithecation
- hypkthecation
- hyplthecation
- hyppothecation
- Hypothacation
- Hypothicition
- Rhypothication
Etymology of HYPOTHECATION
The word "hypothecation" has its roots in Latin and Greek. Its etymology can be traced back to two words: "hypo" and "theke".
The prefix "hypo" comes from the Greek word ὑπο- (hypo-), meaning "under" or "below". This prefix is commonly used in English to indicate something that is subordinate, lower, or underlying.
The word "theke" originates from the Greek word θήκη (thēkē), which translates to "a receptacle", "container", or "chest". It can also refer to a "depository" or "storehouse". In ancient Greece, "theke" was often used to describe a storage place for valuables or important documents.
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