Collateral is a(n)____ that a borrower promises to give to the bank if that borrower is unable to repay the bank's loan.
A)document
B)liability
C)asset
D)interest payment that a borrower promises to give to the bank if that borrower is unable to repay the

Question

Quizplus · Accepted Answer

Collateral is an asset that is pledged as security for a loan. Therefore, it is considered a part of the bank's loan portfolio. It can be used by the bank to recover the loan amount if the borrower is unable to repay it.

Note: Option D is incorrect as it refers to a different concept of "interest payment" and not collateral. Option A is also incorrect as collateral is not a document. Option B is incorrect as collateral is not a liability, but an asset.

Collateral Is A(n)____ That a Borrower Promises to Give to the Bank