The hypothecation agreement,which is the legal document an investor signs when he or she trades stock on margin,includes the maximum amount by which the price of the stock can increase before the amount borrowed from the broker must be repaid.

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The hypothecation agreement does not include the maximum amount by which the price of the stock can increase. It outlines the investor's responsibility to maintain sufficient collateral in their account and to allow the broker to use the securities as collateral for any loans provided for the margin account.

The Hypothecation Agreement,which Is the Legal Document an Investor Signs