A lender's secondary source of repayment in case of a default is:
A)capacity.
B)collateral.
C)character.
D)capital.
E)credit.

Question

Quizplus · Accepted Answer

Collateral is a secondary source of repayment for a lender in case of a default. It refers to assets that the borrower pledges as security for the loan, which can be sold or seized by the lender to recover the outstanding balance. Capacity, character, capital and credit are other factors that a lender considers in assessing a borrower's ability to repay a loan, but they may not be as reliable or tangible as collateral.

A Lender's Secondary Source of Repayment in Case of a Default