Single Answer MCQ
Q-00045453
Why do lenders require collateral from borrowers?
1
To ensure the loan is repaid
2
To increase the loan amount
3
To avoid interaction with borrowers
4
To reduce interest rates
Answer and Solution
Answer
A. To ensure the loan is repaid
Solution:
Lenders require collateral to ensure the loan is repaid. If the borrower defaults, the lender can sell the collateral to recover the funds.
Watch Video Solution