Nonpurpose Loan
Barron's Finance & Investment Dictionary:
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Nonpurpose Loan
loan for which securities are pledged as collateral but which is not used to purchase or carry securities. Under Federal Reserve Board regulation u, a borrower using securities as collateral must sign an affidavit called a Purpose Statement, indicating the use to which the loan is to be put. Regulation U limits the amount of credit a bank may extend for purchasing and carrying margin securities, where the credit is secured directly or indirectly by stock.
| Nonpublic Information, Nonproductive Loan | |
| Nonqualifying Annuity, Nonqualifying Stock Option |
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Nonpurpose Loan
Barron's Banking Dictionary:
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Nonpurpose Loan
Bank loan, collateralized by pledge of securities, in which the proceeds of the Note are to be used for purposes other than purchase of stocks or bonds. Banks are required by Regulation U to have a borrower execute a purpose statement regardless of the use of the loan, whenever a loan is secured directly or indirectly by securities in a margin account.
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Barron's Finance & Investment Dictionary
Dictionary of Finance and Investment Terms. Copyright © 2010 by Barron's Educational Series, Inc. All rights reserved.
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