| > I doubt it, but why wouldn't it be close to market value for public companies? If it's a large amount of shares, there should still be a liquidity discount (not exactly a DLOM, but something like that, because when you try to sell a large amount quickly, you can't get your order filled at the market rates without depressing the market rates). Plus, as we have just discussed, you can presume that even if the shares are fully liquid, part of the gains (if there are gains) will be taxed, and that's money that might not be available to pay off the creditor. On top of that, I'd wager that lenders would subtract an additional safety margin for volatility/risk. I have absolutely no idea, and please don't quote me on this, but it wouldn't surprise me if creditors applied a ratio of at least 1:2. --- Edit: this random website I stumbled upon on the first page of Google search results for the query "using share equity as collateral" (no idea how reliable or representative this is) seems to indicate that a ratio of 1:2 (they say "50%") is applied. They also say that you could expect to pay about 1% in interest annually.
https://www.ennessglobal.com/portfolio-finance/securities-ba... They also mention that there may be qualitative factors that come into play: The key points a lender will look at are:
- The value of your securities
- What the security is made up of
- The liquidity of the security
- If the security is listed, which exchange it is listed on
- How concentrated the shares are
- The industry or field the company trades in
- The management team
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