ECONOMICS
CREDIT
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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Deposit
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Collateral
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Credit
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Guarantee
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Detailed explanation-1: -Collateral is an asset that a borrower owns like a house, property, gold, shares, etc. The owner can use this collateral to take loans from the banks.
Detailed explanation-2: -Collateral is an asset or form of physical wealth that the borrower owns like house, livestock, vehicle etc. It is against these assets that the banks provide loans to the borrower. The collateral serves as a security measure for the lender.
Detailed explanation-3: -Lending (also known as “financing") occurs when someone allows another person to borrow something. Money, property, or another asset is given by the lender to the borrower, with the expectation that the borrower will either return the asset or repay the lender.
Detailed explanation-4: -Lenders demand any asset of the borrower as collateral security.
Detailed explanation-5: -Answer: The formal word used for the ‘security’, such as land, vehicle, livestock, building, etc is called “Collateral".