First National Bank would like to make a loan to an affiliate bank. Which of the following would NOT be acceptable as collateral for such a loan?

Question

Quizplus · Accepted Answer

An account for the benefit of First National held at the affiliate bank in an amount equal to the loan amount cannot be accepted as collateral because it essentially means that First National Bank would be lending to itself through the affiliate bank. This would not provide any real security for First National Bank in the event of default. All the other options listed provide tangible assets that can be sold or redeemed to recoup the loan amount.

First National Bank Would Like to Make a Loan to an Affiliate