Question

When lending government securities, market practice requires collateral equal to ___% of the loaned security market value to be posted.

a. 95
b. 98
c. 100
d. 102
e. 105

Answer 1

The standard collateral requirement in government securities lending is commonly 102% of the loaned security's market value. The correct answer is option D.

Step-by-step explanation:

When lending government securities, a market practice typically requires collateral to be posted. This collateral often exceeds the value of the loaned security to protect against market fluctuations and potential default by the borrower. The standard collateral percentage can vary, but it is commonly 102% of the loaned security market value. Therefore, the correct answer is d. 102%.