Definition, Meaning & Synonyms
collateralization
noun
/kəˌlæt.ə.rə.lɪˈzeɪ.ʃən/
Definition
The process of using an asset as security for a loan or other financial transaction.
Examples
- The bank required collateralization for the business loan.
- She provided her house as collateralization for the mortgage.
- Understanding collateralization is crucial for managing investment risks.
Meaning
Collateralization involves pledging an asset, such as property or stocks, to back a loan, ensuring that the lender can claim the asset if the borrower defaults.
Synonyms
- Securing
- Guarantee
- Pledge
