The Purpose of Collateral in a Secured Loan Agreement Is

question 49

Multiple Choice

The purpose of collateral in a secured loan agreement is to:

• A)reduce the lender's risk.
• B)reduce the expense of administering the loan.
• C)make borrowers indifferent to the default risk of the loan.
• D)increase the rate borrowers are willing to pay for funds.

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Definitions:

Mail and Postage

Expenses associated with sending mail and packages, including the cost of stamps and shipping fees.

Missing Funds

A situation where there is a discrepancy in expected and actual cash or assets, indicating possible errors or theft.

Journal Entry

The act of recording a transaction into the financial records of a company, detailing debits and credits in an accounting journal.

Deposit Recorded

The process of logging cash or checks received into the accounting records of a business or financial institution.