Asked by Jimmy Miller on May 21, 2024
Verified
Assets pledged to guarantee a loan are:
A) factored.
B) collateral.
C) hypothecated.
D) assumed.
Collateral
An asset that a borrower offers to a lender as security for a loan.
Hypothecated
Hypothecated refers to assets that are pledged as collateral for a loan without transferring title or possession to the lender, often used in secured loans.
Loan
A financial agreement in which one party lends money to another, which is then required to repay the amount along with interest over a predetermined period.
- Understand the rationale and strategies companies employ to secure funding.
Verified Answer
PS
Pavneet SinghMay 24, 2024
Final Answer :
B
Explanation :
Collateral refers to assets that are pledged to secure a loan. Factoring refers to the sale of accounts receivable to a third party, hypothecation refers to pledging securities as collateral for a loan, and assumption refers to taking over another party's existing debt.
Learning Objectives
- Understand the rationale and strategies companies employ to secure funding.