Question

The type of collateral (security) used for short-term loan is ___________________.

• A. Real estate
• B. Plant & Machinery
• C. Stock of good
• D. Equity share capital

Answer 1

The correct option is C Stock of good

Business has to provide the securities against the loan taken from any financial institution. These securities are classified as primary security and collateral security. The primary security is that against which a substantial business loans are taken. Collateral security are the additional security which banker may ask to provide to the firm to have more surety against the loan.

Short term loans are taken by the firm to meet out the short term requirement of the business. Stock of goods can be offered as collateral security against the short term loan.