A money loan is said to be collateralized when
A) an asset is pledged by the borrower to the lender in case of default.
B) the borrower pays periodic repayments of principal plus interest to the lender.
C) the loan is used to purchase a capital asset.
D) interest on the loan is compounded on an annual basis.

Question

Quizplus · Accepted Answer

A collateralized loan is one where the borrower pledges an asset as security for the loan, which the lender can seize and liquidate in case of default. This reduces the lender's risk, as they have a way to recoup their losses if the borrower is unable to repay the loan.

A Money Loan Is Said to Be Collateralized When