Collateral is:
A) a valuable asset that is pledged to a lender to secure a loan.
B) the cost of shifting workers from declining sectors of the economy to the growing sectors.
C) the allocation of consumption,work,and leisure across time to maximize well-being.
D) the tendency for economic activities to be coordinated at common points in time.

Question

Quizplus · Accepted Answer

Collateral refers to a valuable asset that a borrower pledges to a lender to secure a loan. If the borrower defaults on the loan, the lender has the right to seize the collateral as a form of repayment. This serves as a guarantee for the lender and reduces the risk of default for the borrower. Common examples of collateral include real estate, vehicles, and jewelry.

Collateral Is