Which one of the following options describe ‘Collateral’?

(A) Double coincidence of wants

(B) Certain products for barter system

(C) Trade in barter system

(D) Asset as guarantee for loan

 

Answer: 

So the correct answer is (D) - Asset as guarantee for loan .

Explanation

Collateral is an asset that the borrower owns and uses this as a guarantee to a lender until the loan is repaid. If the borrower fails to repay the loan, the lender has the right to sell the asset or collateral to obtain payment .

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Davneet Singh

Davneet Singh has done his B.Tech from Indian Institute of Technology, Kanpur. He has been teaching from the past 14 years. He provides courses for Maths, Science, Social Science, Physics, Chemistry, Computer Science at Teachoo.