Which of the Following Is Correct with Regard to Collateral

question 53

Multiple Choice

Which of the following is correct with regard to collateral?

• A) It refers to business (but not personal) assets that a borrower uses to secure a loan or other credit.
• B) It consists of tangible assets like buildings as well as intangible assets like goodwill.
• C) Collateral can be seized by the lender if the loan is not repaid according to specified terms.
• D) It refers to personal (but not business) assets that a borrower uses to secure a loan or other credit.
• E) Banks are most impressed with debt investment.

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Definitions:

Manufacturing Firms

Companies that produce and sell goods using raw materials, labor, and machinery.

Computer Chips

Small semiconductor devices that contain integrated circuits used to perform computing tasks.

Capital

Assets used in the production of goods and services, including physical tools, machinery, buildings, as well as intangible items like software or intellectual property.

Labor

The human effort, whether physical or mental, expended in the production of goods and services.