Single Answer MCQ
Q-00045472
What is collateral in a loan agreement?
1
A promise to repay
2
An asset pledged as security
3
The interest rate on the loan
4
The total amount borrowed
Answer and Solution
Answer
B. An asset pledged as security
Solution:
Collateral refers to an asset that a borrower pledges to a lender as security for a loan. If the borrower defaults, the lender has the right to sell the collateral to recover their losses.
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