Different Types of Money
Hot money : It is the flow of funds (or capital) from one country to another in order to earn a short-term profit on interest rate differences and/or anticipated exchange rate shifts
Soft currency : It is a currency which is hyper sensitive and fluctuates frequently. Such currencies react very sharply to the political or the economic situation of a country.
Hard Currency : Currency that is not likely to depreciate suddenly or to fluctuate greatly in value.
Cheap Money : A loan or credit with a low interest rate, or the setting of low interest rates by a central bank like the Federal Reserve. Cheap money is good for borrowers, but bad for investors, who will see the same low interest rates on investments like saving funds, CDs and bonds.
Define Pledge, Hypothecation and Mortgage.
Pledge is used when the lender (pledgee) takes actual possession of assets (i.e. certificates, goods. Such securities or goods are movable securities. In this case the pledgee retains the possession of the goods until the pledger (i.e. borrower) repays the entire debt amount. In case there is default by the borrower, the pledgee has a right to sell the goods in his possession and adjust its proceeds towards the amount due (i.e. principal and interest amount). Some examples of pledge are Gold /Jewelry Loans, Advance against goods,/stock, Advances against National Saving Certificates etc.
Hypothecation is used for creating charge against the security of movable assets, but here the possession of the security remains with the borrower itself. Thus, in case of default by the borrower, the lender (i.e. to whom the goods / security has been hypothecated) will have to first take possession of the security and then sell the same. The best example of this type of arrangement are Car Loans.
Mortgage is used for creating charge against immovable property which includes land, buildings or anything that is attached to the earth or permanently fastened to anything attached to the earth (However, it does not include growing crops or grass as they can be easily detached from the earth). The best example when mortgage is created is when someone takes a Housing Loan / Home Loan. In this case house is mortgaged in favor of the bank / financer but remains in possession of the borrower, which he uses for himself or even may give on rent
Mortgage is used for creating charge against immovable property which includes land, buildings or anything that is attached to the earth or permanently fastened to anything attached to the earth (However, it does not include growing crops or grass as they can be easily detached from the earth). The best example when mortgage is created is when someone takes a Housing Loan / Home Loan. In this case house is mortgaged in favor of the bank / financer but remains in possession of the borrower, which he uses for himself or even may give on rent
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