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 .
