Borrowers must often provide security to moneylenders. What is the proper term for protection, such as a piece of land, a car, some animals, a structure, etc.?

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Debentures

Collateral

None of the Above

answer is C.

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Detailed Solution

Collateral is the proper term for protection, such as a piece of land, a car, some animals, a structure, etc.
If a borrower does not return a loan by agreement, the landlord may take possession of collateral—an object of value—from the borrower. A borrower's assets, such as a home or piece of property, gold, shares, etc., are considered collateral. The owner may borrow money from the banks using this collateral. For example, if Mr Rahul requires a loan of Rs. 10,000, he can use his property as collateral and obtain a loan from the bank. If Mr Rahul cannot repay the loan, the bank has the right to sell his collateral and reclaim the loan amount. He can get his property back from the bank upon repayment.

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