A firm has inadequate ____________ if it does not have sufficient assets to pledge in the case of default. As a result it will likely be rejected for credit.

Question

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Collateral refers to assets that a borrower offers a lender to secure a loan. If the firm does not have sufficient assets to pledge as collateral, it may be rejected for credit because the lender has less security in the case of default.

A Firm Has Inadequate ____________ If It Does Not Have