An inventory loan agreement in which the inventories pledged as collateral are physically separated from the firm's other inventory and placed under the control of a third-party is called
A) a floating lien agreement.
B) a chattel mortgage agreement.
C) a field warehouse agreement.
D) a securitized inventory loan arrangement.

Question

Quizplus · Accepted Answer

A field warehouse agreement is an inventory loan agreement in which the inventories pledged as collateral are physically separated from the firm's other inventory and placed under the control of a third-party (the warehouse operator). This arrangement provides additional security to the lender because the inventory is stored in a location outside the borrower's control, reducing the risk of loss or theft.

An Inventory Loan Agreement in Which the Inventories Pledged as Collateral