Kimberly borrows $50,000 from a bank. She gives the bank a security interest in her ________ inventory. This implies that if Kimberly does not repay the loan in the stipulated period, the bank can claim any assets she purchased after signing the security agreement.

Question

Quizplus · Accepted Answer

The term "after-acquired" implies that the security interest applies to assets that the debtor acquires after signing the security agreement. This provides the bank with collateral for the loan, even if Kimberly purchases additional inventory after the loan is granted.

Kimberly Borrows $50,000 from a Bank