Single Answer MCQ
Q-00015846
What is the general reason banks require collateral for loans?
1
To make loans cheaper
2
To reduce their risk
3
To increase profits
4
To promote savings
Answer and Solution
Answer
B. To reduce their risk
Solution:
Banks require collateral to reduce their risk. If the borrower fails to repay the loan, the bank can claim the collateral to recover its losses.
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