collateral calls


Demands made in the form of phone calls to banks on insurance contracts they've written to request collateral. If an individual insures a large bond to eliminate their risk of losing money on the bond if the issuer goes out of business, the insurance provider creates a contract that states they will give the individual the value of the bond. There is also risk to the individual the insurance company or bank could be unable to make good on their contract to pay the value of the bond, therefore collateral is paid from the bank or insurance company to the individual. If the risk level of the insuring company increases, the individual can make "collateral calls" for additional collateral against the insured item.

Use collateral calls in a sentence

There were some collateral calls made and I thought that was a good idea, because we needed to do it.

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The world of business is very complicated, and one of the more interesting types of business calls are known as collateral calls.

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We had no choice but to make those collateral calls after we ran the figures and saw our current situation. It wasn't our first option, but it became one of our only ones.

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