Question

What do you mean by 'collateral'?

• A. It is a liability that the borrower bears while taking loan
• B. It is a document used in the process of taking credit
• C. An asset that a borrower owns and the lender uses it as a guarantee until the loan is re-paid
• D. It is an asset

Answer 1

Answer: (C)

An asset that a borrower owns and the lender uses it as a guarantee until the loan is re-paid

1:Collateral is a type of a security/guarantee taken by the banks from its customers.
2:Usually collateral are taken by the banks for lending money to its customers.
3:Collateral can be in the form of fixed deposit documents, property, documents, etc.