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It's even more obvious when you flip the relationship around. What's it called when your broker lends you money, at a fixed interest rate, for you to then go and invest in risk assets?

It's a margin loan. Which I hope I don't need to say is NOT risk-free.

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Fair point, but when you take a margin loan, you also don’t have to register it as a security.

But the broker-dealer who made the margin loan is extremely heavily regulated by the SEC- margin loans are some of the things that they have the longest history with!

I know, just saying it's not a good example to make the point about "risk of loss implies need to register as security".

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