In 2011, Tim's Gyms needs to finance the building of a new gym. Suppose Tim secures this financing from a bank, and the bank receives ownership if Tim fails to make payments. This type of funding is
A)a mortgage obtained in the loan market.
B)a stock issued in the bond market.
C)a bond issued in the bond market.
D)a mortgage obtained in the stock market.
E)a stock issued in the loan market.

Question

Quizplus · Accepted Answer

The type of financing described in the scenario is a mortgage obtained in the loan market. This is where a borrower, in this case, Tim's Gyms, secures a loan and pledges an asset, in this case, the new gym, as collateral to the lender, in this case, the bank. If Tim fails to make payments, the bank can claim ownership of the gym as a way of recouping their losses.

In 2011, Tim's Gyms Needs to Finance the Building of a New