Ronnie needed an expensive piece of equipment to expand his business.He borrowed the money from the bank and pledged the equipment as ___________.If Ronnie does not repay the loan, the bank can take his equipment.

Question

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Collateral is an asset or property that a borrower pledges as security for a loan. In this case, Ronnie pledged his expensive equipment as collateral to the bank to secure his loan. If he fails to repay the loan, the bank can take possession of the equipment to recover their money. A promissory note is a written promise to repay a debt, long-term debt refers to a type of borrowing that is paid back over a period of more than one year, and an asset in escrow refers to funds held by a third party until conditions are met. None of these options accurately describe Ronnie's situation.

Ronnie Needed an Expensive Piece of Equipment to Expand His