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Simple English definitions for legal terms
agency security
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A quick definition of agency security:
Agency security: A type of collateral given to guarantee the fulfillment of an obligation by a government agency. It is a way for the agency to assure creditors that they will be repaid any money or credit extended to them. A security can also refer to an instrument that shows ownership rights in a company or government, or other investment rights. Securities have no intrinsic value and their worth depends on the financial condition of the entity that issued them.
A more thorough explanation:
Agency security is a type of government security that is used to guarantee the fulfillment of an obligation. This means that if a government agency owes money to someone, they can offer agency security as collateral to ensure that the creditor will be repaid with interest.
For example, let's say that a government agency needs to borrow money to fund a new project. They might issue agency securities to investors, promising to repay the money with interest at a later date. These securities would serve as collateral, giving investors some assurance that they will be repaid.
Overall, agency security is an important tool that governments can use to raise funds and manage their finances. By offering these securities, they can attract investors and ensure that they have the resources they need to carry out their work.