Series 26: Haircuts

Taken from our Series 26 - Investment Company Products/Variable Contract Limited Principal Exam

Definition of the term Haircuts...

a discount that the SEC applies to the market value of securities held by a broker-dealer. Since the value of a security is constantly fluctuating, the SEC discounts its current market value to provide a cushion to account for a possible decrease in value at the time of a firm's liquidation.

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