What characterizes a partly-secured account?

• A. An account with a credit balance always
• B. A position where holdings value is greater than the debit balance
• C. A position where holdings value is less than the debit balance
• D. An account that is fully paid off

Answer: (C)

A partly-secured account is characterized by a situation where the value of the holdings is less than the debit balance. This indicates that the account owner owes more than the current value of the assets they hold. In such cases, the lender may have concerns regarding the security of the debt, as the assets available to cover the obligation are insufficient. This situation typically highlights a greater level of risk for any lending institution, as the collateral backing the loan does not fully cover the outstanding balance.

In contrast, the other choices describe scenarios of fully secured accounts or accounts with different balance conditions. An account with a credit balance suggests a positive net position, while holdings with a value greater than the debit balance indicate that the account is adequately secured. An account that is fully paid off signifies no debt at all, which does not align with the concept of being partly secured.