If a business man borrow $1000 from a bank on his note and give ten
shares of stock to the bank, to be held by it simply as security, the
stock thus given would be termed collateral. These collaterals are not
the bank's property and the bank is responsible for their safe
keeping. If coupons mature while bonds are being held as collateral,
the owners are usually allowed to collect the amount for which they
sell. Sometimes one note is given as collateral security for another
which is discounted.